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AMERICAN   METHODS 

IN 

FOREIGN  TRADE 


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S!IH!!lllffllllllllTri!HIII1l1ITII'!!!!ii!'iV"!:''r?r^lW^T'^^Tn^^ 


AMERICAN   METHODS 

IN 

FOREIGN   TRADE 

A  Guide  to  Export  Selling'  Policy 


BY 

GEORGE  C.  VEDDER 


First  Edition 
Second  Impression 


McGRAW-HILL  BOOK  COMPANY,  Inc. 
239  WEST  39th  STREET.     NEW  YORK 


LONDON:   HILL  PUBLISHING  CO.,  Ltd. 
6  &  8  BOtrVERIE  ST.,  E.  C. 

1919 


^5>a7^ 


Copyright  1919,  by  the 
McGRAW-HILL  BOOK  COMPANY,  Inc. 


TO  THE 

AMERICAN   BUSINESS   EXECUTIVE 

TRUE  TO  HIS  HERITAGE  OF  IDEALISM 

CONFIDENT  OF  THE  EVENTUAL  TRIUMPH 

OF  CORRECT   PRINCIPLES 

ENTHUSIASTIC,  HARD-WORKING  AND  FAIR-PLAYING 

THIS  BOOK  IS  DEDICATED 


PEEFACE 


Ameeican  maimfacturers  are  not  the  best  export- 
ers in  the  world,  but  the  best  exporters  in  the  world 
are  American  manufacturers.  In  the  United  States 
are  to  be  found  the  most  efficient  world  traders  in 
steel,  heavy  machinery,  office  specialties,  typewrit- 
ers, cash  registers,  talking  machines,  automobiles, 
shoes,  hosiery,  hardware,  cameras  and  scores  of 
other  articles.  Some  of  them  have  not  as  yet  the 
largest  overseas  trade  in  their  line,  but  their  skill 
will  eventually  make  them  leaders  in  this  respect 
also. 

Volume  of  sales,  however,  is  not  an  all-important 
consideration  for  it  takes  care  of  itself  in  due  time 
if  methods  are  sound  and  constructive  and  possess 
continuity.  The  statement  that  the  United  States 
has  the  best  exporters  of  scores  of  lines  means  that 
we  have  the  men  who  have  shown  preeminent  ability 
in  building  up  a  profitable  foreign  demand  for  these 
goods,  on  the  solid  foundation  of  that  due  regard 
for  the  rights  and  welfare  of  the  distributor  and  con- 
sumer from  which  springs  good  will,  the  only  real 
guarantee  of  future  profit  and  growth. 

Our  wejakness  in  the  foreign  trade  field  is  there- 
fore not  mat  we  do  not  know  how  to  export,  but 
rather  that,  as  yet,  good  American  exporters  are 

vii 


viii  PREFACE 

relatively  few  in  number.  The  great  majority  of 
our  mamifacturers  have  not  learned  how  the  con- 
spicuous successes  of  their  compatriots  have  been 
achieved.  Wlien  they  really  want  to  find  this  out, 
they  will.  The  following  pages  present  facts  gath- 
ered and  ideas  developed,  not  by  research,  but  by 
years  of  constant  association  with  successful  export- 
ing manufacturers,  foreign  sales  managers,  general 
exporters  and  overseas  buyers.  May  they  serve  as 
a  guide  to  a  sound  export  selling  policy,  adapted  to 
each  investigator's  line  and  in  harmony  with  Ameri- 
can ideas  of  merchandizing. 

If  any  of  the  ideas  presented  in  these  pages  seem 
to  the  reader  to  deserve  amplification  or  amendment 
the  author  hopes  to  receive  constructive  sugges- 
tions quoting  the  exact  passage.  The  conceptions 
set  forth  in  this  volume  are  not  the  precepts  of 
a  theorist  but  the  discoveries  and  deductions  of  a 
practical  man  who  is  an  earnest  seeker  of  the  truth 
and  who  believes  he  has  collected  enough  of  it  to 
make  it  worth  while  to  pass  it  on  to  all  in  printed 
form. 

The  reality  of  the  existence  of  distinctively 
American  methods  of  building  up  a  foreign  trade 
may  come  as  a  surprise  to  many  of  our  manufac- 
turers, into  whose  ears  has  for  two  decades  been 
pouring  a  crescendo  stream  of  adverse  criticism  of 
their  handling  of  export  business.  In  fact  it  may 
be  doubted  whether  our  successful  exporters  them- 
selves fully  realize  how  their  selling  activities  differ 
from  those  of  European  manufacturers.  They  have 
not,  as  so  repeatedly  recommended,  imitated  the 
English,   French  and  German  traders,  but  when 


PREFACE  IX 

really  earnestly  seeking  foreign  business  have 
rather  disregarded  them,  studied  their  markets  for 
themselves  and  solved  the  problems  there  presented, 
by  the  application  of  the  principles  of  good  business 
as  they  know  them,  adapting  them  to  existing  con- 
ditions everywhere. 

If  at  times  it  seems  to  the  reader  that  the  note 
of  idealism  is  too  strongly  sounded,  may  he  at- 
tribute this  to  a  profound  conviction  that  our  suc- 
cess in  foreign  trade  is  largely  dependent  on  the 
practical  application  by  our  manufacturers  of  the 
Golden  Rule  in  their  dealings  with  buyers  in  over- 
seas markets.  Those  who  have  become  leaders  in 
this  field  have,  either  deliberately  or  unconsciously, 
practised  it.  This  book  could  render  no  greater 
national  service  than  to  discourage  the  export 
activities  of  survivors  of  the  era  of  Caveat  Emptor. 

So  enamored  with  German  methods  are  our  su- 
perficial observers  of  world  trade  and  so  dazzled 
and  intimidated  by  their  seeming  effectiveness  are 
our  tariff  protected  manufacturers  and  political 
cheap-competition  alarmists,  that  it  seems  advisable 
to  devote  first  attention  to  them,  later  drawing  some 
conclusions  as  to  future  rivalry  to  be  expected  from 
this  quarter.  American  foreign  trade  policies,  as 
will  be  made  clear,  differ  in  principle  from  the  Teu- 
tonic, though  sometimes  appearing  to  resemble  them 
in  surface  details.  In  order  to  avoid  being  misled, 
it  is,  therefore,  important  to  get  the  fundamental 
weaknesses  of  the  German  exporter  firmly  fixed  in 
mind. 


CONTENTS 


FAGB 

Preface     v 

CHAPTER 

I.  The  Fundamental  Weaknesses    op    German  Trade 

Policy 1 

II.  Why  a  Nationalized  Foreign  Trade?    ....  10 
\  III.  The  Webb-Pomerene  Act  and  Combinations  in  For- 
eign Trade 16 

IV.  The  Export  Commission  House 22 

V.  The  Export  Selling  Agent 27 

1     VI.  The  Export  Manager  and  the  Exporting  Manufac- 
turer        32 

VII.  The  Export  Department -40 

VIII.  The  Export  Selling  Plan 44 

IX.  Selling  through  Exclusive  Agents       ....  48 

y     X.  General  Merchandizing  in  Foreign  Markets    .       .  52 

'  XI.  Determination  op  Export  Prices 56 

XII.  Making  a  Start  in  Direct  Exporting  ....  60 

XIII.  Circularizing  by  the  Beginner  in  Direct  Exporting  65 

XIV.  Export  Publications  and  the  Beginner   in   Direct 

Exporting 70 

XV.  The  Export  Catalog 75 

XVI.  American  Salesmen  in  Foreign  Trade  ....     80 

XVII.  Cooperating  with  Foreign  Agents  and  Dealers       .     89 

XVIII.  General  Publication  Publicity  in  Foreign  Markets    95 

XIX.  Foreign  Credits 101 

XX.  International  Crooks 108 

XXI.  Handling  Foreign  Correspondence        .       .       .       .113 
XXII.  Heavy  Machinery  in  Foreign  Markets        .       .       .   119 

XXIII.  The   Exportation   op   Raw,    Staple,   and  Standard- 

ized Products 124 

XXIV.  A  Plea  for  Constructive  Criticism       ....  128 
XXV.  The  "Made  in  Germany"  Idea 133 

XXVI.  A  Suggestion  to  the  Department  of  Commerce       .  147 


xii  CONTENTS 

CHAPTEH  PAOB 

XXVII.  American  Banks  Abroad 151 

XXVIII.  Foreign  Investments  and  Export  Trade  .       .       .  156 

XXIX.  The  American  Merchant  Marine        ....  162 

XXX.  Reciprocity  Treaties  and  Preferential  Tariffs  .  169 

XXXI.  America's  Preeminence  in  Salesmanship    .       .       .  173 

XXXII.  The  Protective  Tariff  and  Foreign  Trade    .       .  179 

XXXIII.  German  Competition 187 

L'Envoi 196 

Index 199 


AMERICAN    METHODS 
IN   FOREIGN    TRADE 


CHAPTER  I 

THE  FUNDAMENTAL  WEAKNESSES  OF 
GERMAN  TRADE  POLICY 

German  business  principles  and  methods  were  as 
much  the  offspring  of  autocracy  as  were  the  govern- 
mental policies  of  that  country.  Just  as  the  naval 
and  military  establishments  of  the  Kaiser  disre- 
garded all  laws  of  civilization  and  humanity  in  the 
prosecution  of  their  war  aims,  so  German  industry, 
supervised  and  directed,  not  by  independent  individ- 
uals whose  survival  depended  on  their  jB.tness  to 
serve  society,  but  by  imperial  authority  whose  favor 
or  disfavor  decided  to  a  large  extent  the  average 
citizen's  future,  broke  most  of  the  basic  laws  of  good 
business  and  fair  competition  as  we  understand 
them. 

German  commercial  frightfulness  preceded  the 
revelation  of  its  military  counterpart  and  its  aim 
was  the  development  of  manufacturing,  not  to  serve 
society  with  the  products  thereof  or  promote  the 
welfare  of  producers,  distributors  and  users  of 
them,  but  rather  to  build  up  the  industrial  machine 


2      AMERICAN  METHODS  IN  FOREIGN  TRADE 

necessary  to  autocracy's  aims  of  world  conquest. 
Can  any  thinking  man  believe  otherwise  in  view  of 
the  German  Government's  unhesitating  course  in 
July,  1914?  Would  any  ruler  or  ruling  class,  how- 
ever autocratic,  have  so  deliberately  dedicated  a 
great  industrial  structure  to  the  needs  of  world  war, 
hopelessly  involving  the  economic  future  of  its  every 
citizen,  had  it  not  been  so  planned  from  the  be- 
ginning? Germany  was  in  the  position  of  the 
burglar  who,  having  mortgaged  his  all  to  equip  him- 
self, sets  out  to  rob  a  bank  in  the  hope  of  recovering 
his  investment  with  as  much  more  as  he  can  get. 

Most  historians  agree  that  our  Civil  War,  which 
was  fought  with  slavery  as  the  immediate  popular 
issue,  was  in  reality  caused  by  the  economic,  social 
and  political  divergence  of  the  North  and  South.  It 
is  now  believed  that  years  before  the  great  struggle, 
slavery  was  a  doomed  institution  that  had  always 
carried  within  itself  the  germ  of  its  own  destruction, 
social  injustice.  The  South  fought  against  the  North 
as  the  unrecognized  embodiment  of  the  inevitable. 

The  writer  ventures  the  prediction  that  historians 
will  demonstrate  that  the  great  World  War  was 
precipitated  by  the  German  Government's  realiza- 
tion that  the  inevitable  decline  of  a  world  trade, 
deliberately  built  up  to  serve  abnormal  and  selfish 
aims,  was  impending  or  had  already  begun.  It  may 
be  that  the  minds  of  those  who  ordered  this  terrible 
thing  did  not  fully  comprehend  what  was  urging 
them  on.  Perhaps  the  impulse  was  born  of  a  sub- 
conscious impression  of  approaching  disaster. 
However  this  may  be,  the  fact  seems  very  clear 
that,  just  as  Germany  at  war  found  herself  forced 


WEAKNESSES  OF  GERMAN  TRADE  POLICY    3 

to  feed  her  human  chattels  on  victory  after  victory, 
conquest  after  conquest,  to  ward  off  internal 
trouble,  so  she  was,  in  the  first  place,  driven  to  war 
itself,  to  save  autocracy  from  the  political  effect  of 
the  threatened  revelation  of  the  weakness  of  an 
enormous  commercial  structure  built  on  the  insecure 
sands  of  bad  business  principles  and  unsound 
methods  and  strained  in  every  part  by  the  constant 
pressure  of  enlightened  competition.  German  com- 
merce, like  slavery,  carried  within  itself  the  germ 
of  its  own  destruction. 

And  why  was  German  trade  facing  an  uncertain 
future  in  1914? 

It  seems  strange  that  men  who,  calmly  and  with 
full  assurance  as  to  the  outcome,  await  the  down- 
fall of  a  rival  who,  by  unbusinesslike  methods,  takes 
away  some  of  their  trade,  should  not  have  realized 
that  the  German  system  was  not  only  doomed  to 
eventual  failure,  but  was  at  all  times  extremely 
vulnerable  to  intelligent  competition.  Later  on  it 
will  be  shown  that  this  vulnerability  provided  our 
pioneer  exporters  with  some  of  their  greatest  op- 
portunities, but  at  this  point  let  us  confine  our- 
selves to  the  consideration  of  the  inherent  unsound- 
ness of  Teutonic  methods. 

The  much-praised  German  banks  in  all  parts  of 
the  world  had  served  primarily,  not  their  depositors 
and  borrowers,  not  the  business  needs  of  the  coun- 
tries in  which  they  were  located,  but  chiefly  those 
of  Germany  and  her  manufacturers  and  exporters. 
This  certainly  constitutes  unsoundness,  if  there  is 
anything  in  the  service  theory  of  banking.  Credits 
were  extended  or  withheld,  not  as  demanded  by  the 


4      AMERICAN  METHODS  IN  FOREIGN  TRADE 

best  interests  of  local  importers  and  distributors, 
but  as  such  action  might  benefit  those  who  planned 
to  force  their  products  on  the  community  by  mak- 
ing it  difficult  or  impossible  to  obtain  others. 

Many  American  manufacturers  can  testify  to  the 
malign  influence  of  these  banks  on  the  progress  of 
various  countries.  How  many  prospective  buyers 
of  English,  French  and  American  goods  were 
switched  to  those  made  in  Germany,  chiefly  or  solely 
by  the  threatened  withholding  of  necessary  and  en- 
tirely warranted  credits,  no  one  can  estimate,  but 
examples  are  sufficiently  numerous  to  prove  the 
prevalence  of  the  practice.  To  be  sure,  the  crafty 
bank  "manager  was  not  so  foolish  as  to  fail  to  recog- 
nize that  he  could  not  in  some  cases  go  too  far  and 
there  are  instances  where,  after  all  possible  ob- 
structive tactics  had  been  employed  and  the  position 
of  the  credit  seeker  was  sufficiently  independent  to 
make  it  probable  that  he  could  get  what  he  wanted 
elsewhere,  the  bank  submitted  to  the  inevitable  and 
took  the  best  profit  obtainable.  This  never  hap- 
pened, however,  so  long  as  there  remained  a  pos- 
sibility of  diverting  the  business  to  a  German  house. 

German  banks  repeatedly  violated  the  confiden- 
tial nature  of  their  relations  with  foreign  importing 
firms.  The  correspondence  files  of  American  manu- 
facturers are  full  of  complaints  from  customers 
which  show  conclusively  that  selling  representatives 
of  German  houses  were  immediately  provided  with 
full  information  regarding  all  transactions  between 
foreign  firms  and  competing  sources  of  supply,  the 
details  of  which  came  to  the  attention  of  German 
banks  through  the  handling  of  documentary  drafts. 


WEAKNESSES  'OF  GERMAN  TRADE  POLICY    5 

the  discussion  of  prospective  credits  or  other 
negotiations  usually  regarded  by  honorable  busi- 
ness men  as  confidential. 

''Made  in  Germany"  speedily  came  to  be  a  label 
of  inferiority  for  the  good  and  sufficient  reason  that 
one  of  the  chief  selling  points  of  the  exporters  of 
that  country  was  cheapness.  When  the  seller 
educates  his  customers  to  look  upon  price  as  a  first 
consideration  he  subordinates  quality,  subjects  him- 
self to  the  severe  competition  of  inferior  and 
cheaper  goods  and  must  himself  lower  the  quality 
of  his  product  when  he  reaches  the  point  where 
improvement  of  facilities  and  increase  of  output  can 
no  longer  effect  the  economies  to  warrant  further 
price  reductions.  Only  the  maker  of  quality  goods 
whose  chief  selling  argument  is  service  to  the  user, 
is  immune  to  the  evils  of  cheap  competition  and  his 
immunity  is  universal.  In  but  a  few  lines,  such  as 
cutlery  and  dyestuffs,  were  German  manufacturers 
preeminent  as  makers  of  quality  products. 

American  manufacturers  were  repeatedly  ex- 
horted to  imitate  the  Germans  who  it  was  said  would 
go  to  any  extreme  to  supply  what  was  wanted. 
Could  any  policy  be  more  shortsighted?  Consider 
the  manufacturer  whose  success  has  been  made  by 
educating  domestic  distributors  and  users  to  the 
desirability  of  an  article  which  he  believes  to  be 
superior  to  any  similar  product.  Is  he  to  keep  out 
of  foreign  markets,  make  the  inferior  article  to 
which  they  are  accustomed  or  repeat  abroad  what 
he  has  done  at  home? 

Adapting  a  product  to  a  market  is  ridiculously 
reactionary  unless  rendered  absolutely  necessary  by 


6     AMERICAN  METHODS  IN  FOREIGN  TRADE 

practical  considerations  of  climate,  law,  taste  or 
other  conditions  beyond  the  control  of  the  manu- 
facturer, distributor  or  user.  Conforming  to  the 
whim  of  those  who  insist  on  having  a  certain  thing 
because  they  have  always  had  it  may  result  in  larger 
immediate  sales,  but  it  is  not  constructive. 

The  German  credit  system  was  a  source  of  great 
weakness  for  two  reasons.  The  terms  accorded  to 
foreign  buyers  were  based  on  bad  business  prin- 
ciples. The  real  function  of  mercantile  credit  is  not 
financial  assistance  to  individual  recipients.  Its  ex- 
tension is  a  manifestation  of  that  confidence  in  the 
business  integrity  of  business  men  without  which 
world  commerce  would  come  to  a  standstill.  One 
of  its  purposes  is  service,  eliminating  as  it  does 
the  intolerable  inconvenience  incident  to  the  pay- 
ment of  cash  in  advance  or  on  delivery.  Its  greatest 
benefit  is  the  multiplication  of  the  economic  useful- 
ness of  capital,  making  it  possible  for  the  whole 
civilized  world  to  transact  a  greatly  increased 
volume  of  business  on  its  accumulated  wealth. 

When  the  credit  function  is  degraded  by  its  em- 
ployment as  a  competitive  weapon  we  take  all  the 
chances  incident  to  price  cutting  and  wildcat  bank- 
ing. Germany  encouraged  and  supported  her  busi- 
ness men  in  running  these  risks,  not  in  order  to  lay 
a  strong  foundation  for  future  trade,  but  to  build 
up  as  rapidly  as  possible  the  needed  industrial  prop 
of  her  militarism  and  imperialism.  The  effect  was 
to  develop  an  enormous  artificially  inflated  com- 
merce with  the  incidental  demoralization  of  world 
markets  and  the  enslavement  of  many  distributors 
of  manufactured  goods  throughout  the  world. 


WEAKNESSES  OF  GERMAN  TRADE  POLICY    7 

For  tlie  extension  of  long  credits,  iinwarranted 
by  anything  but  the  German  greed  for  trade,  usually 
did  one  or  both  of  two  things  to  the  recipient.  He 
either  became  over-extended  and  got  into  difficulties 
or  forfeited  his  independence  by  owing  more  than 
he  could  pay,  often  becoming  as  a  result  little  more 
than  the  paid  manager  of  what  was  formerly  his 
own  business. 

The  manufacturer  has  a  double  duty.  He  is  at 
once  the  custodian  of  the  welfare  of  his  employees 
and  that  of  his  distributors  and  consumers.  The 
German  manufacturer  looked  after  only  the  first  of 
these  obligations.  He  took  care  of  his  co-workers 
because  they  were  necessary  to  his  country's  aims, 
but  that  enlightened  selfishness  which  recognizes 
distributors  as  co-partners  and  satisfied  customers 
as  the  greatest  of  business  assets,  was  never  one 
of  his  characteristics. 

German  exporters  followed  a  wide  range  of  de- 
ceptive practices.  Among  these  may  be  mentioned 
briefly  the  placing  of  German  name  plates  on 
machinery  made  elsewhere,  the  use  of  brands  be- 
longing to  non-Teutonic  firms  on  inferior  German 
goods  and  carefully  calculated  misrepresentations 
regarding  specific  products  of  competing  nations. 

It  is  impossible  for  anyone  to  prove  at  this  time 
that  the  foregoing  and  less  known  and  less  im- 
portant weaknesses  of  the  German  trade  policy, 
destined  it  to  ultimate  disaster,  but  there  were  many 
evidences  during  the  period  of  1910-1914  that  Ger- 
many, having  sown  the  wind,  was  to  reap  the  whirl- 
wind. Certainly  no  good  economist  or  business  man 
will  claim  that  trade  practices  which  are  recognized 


8      AMERICAN  METHODS  IN  FOREIGN  TRADE 

as  unsound  when  employed  by  individuals,  become 
sound  and  desirable  because  they  are  advocated  and 
supported  by  an  exceptionally  able  and  powerful 
but  entirely  selfish  autocracy. 

If  German  bankers,  manufacturers  and  exporters 
had  not  had  the  backing  of  the  Imperial  Govern- 
ment, the  failure  of  their  methods  would  have  come 
quickly.  To  those  who  believe  in  the  eventual 
triumph  of  correct  principles  it  is  clear  that  ultimate 
failure  was  certain. 

Not  to  recognize  that  any  business  success,  built 
on  a  bad  foundation,  is  at  best  but  temporary,  how- 
ever prolonged  it  may  be  by  the  support  of  the  tax- 
ing power  of  a  great  country,  is  to  contend  that 
wrong,  strongly  backed  up,  becomes  right.  To  be- 
lieve in  the  ultimate  triumph  of  German  frightful- 
ness,  commercial  or  military,  is  to  ignore  the  resist- 
less strength  of  the  normal  reactions  of  human 
nature. 

It  is  not  contended  that  the  things  that  Germany 
did  were  wrong  in  themselves.  The  establishment 
of  foreign  banks  and  steamship  lines,  the  accumula- 
tion of  information  on  which  to  base  credit  and 
guide  trade  seekers — all  these  things  were  admirably 
adapted  to  serve  the  legitimate  aims  of  industrial 
leaders  and  properly  used,  would  have  benefited 
not  only  German  society,  but  the  whole  civilized 
world.  That  the  commercial  power  incident  to  the 
control  of  these  great  facilities  was  used  for  entirely 
selfish  objects,  meant  ultimate  disaster  just  as  cer- 
tainly as  autocracy's  misuse  of  its  political  power 
led  eventually  to  its  own  destruction. 

German  trade  methods  were  autocratic  and  selfish. 


WEAKNESSES  OF  GERMAN  TRADE  POLICY    9 

The  American  manufacturer's  democratic  spirit  of 
co-operation  with  the  distributor  in  serving  the  con- 
sumer for  the  good  of  all  concerned,  has  laid  a  firm 
foundation  for  a  great  trade  in  every  market  and 
is  destined  to  pervade  the  whole  civilized  world. 


CHAPTER  II 
WHY  A  NATIONALIZED  FOREIGN.  TRADE? 

There  is  no  stronger  evidence  of  the  insidious 
character  of  the  influence  of  German  ideas  than  the 
tendency,  not  only  of  our  foreign  trade  pamphlet- 
eers and  other  academic  exporters,  but  also  of  our 
so-called  big  business  men,  to  look  upon  the  nation- 
alizing of  foreign  trade  as  desirable.  Because 
Germany,  by  the  establishment  of  central  agencies 
combined  that  country's  commercial  and  industrial 
institutions  and  facilities  into  a  glorified  govern- 
mental trust,  which,  by  steam-roller  methods  and 
others  even  less  creditable,  seemed  able  to  attain 
whatever  aim  its  creators  desired,  we  are  constantly 
being  told  that  combination  and  nationalization  of 
the  efforts  of  our  manufacturers  is  essential  to  the 
best  results  in  foreign  trade.  * '  Nothing  succeeds  like 
success"  in  carrying  conviction,  but  too  often  tem- 
porary success  based  on  bad  business  principles  is 
sadly  misleading. 

That  a  general  tendency  can  be  wrong  is  capable 
of  much  exemplification.  No  more  conspicuous  cas& 
exists  than  that  of  Henry  Ford.  If  he  had  followed 
the  general  trend  of  the  first  ten  years  in  his  field 
of  industry  instead  of  adhering  persistently  to  good 
business  principles  as  he  knew  them,  while  he  might 
not  have  failed  as  so  many  did,  he  certainly  would 

10 


WHY  A  NATIONALIZED  FOREIGN  TRADE?    11 

never  have  been  the  industrial  leader  that  he  now 
is.  It  is  critically  important  today  that  our  manu- 
facturers have  the  courage  to  refuse  to  imitate 
others  and  adhere  to  American  methods. 

The  nationalization  of  trade,  foreign  or  domestic, 
is  contrary  to  the  dictates  of  common  sense.  The 
commerce  of  the  United  States  as  a  whole  has  been 
developed  by  the  producing  and  selling  genius  of 
the  American  business  executive  and  rests  upon  the 
secure  foundation  of  the  aggregate  good  will — the 
reputation  for  quality  of  product,  service  and  fair 
dealing — built  up  by  all  producing  and  selling  firms. 
The  success  of  every  American  manufacturer  at 
home  or  abroad  rests  on  the  recognition  of  this 
fundamental  fact.  Why  should  we,  in  our  hour  of 
greatest  opportunity  for  service  and  profit,  depart 
from  tried  and  proven  principles? 

Our  Government  can,  to  be  sure,  accomplish  much 
by  diplomatic  means  to  create  a  favorable  at- 
mosphere and  can  also,  by  the  dissemination  of  gen- 
eral as  well  as  specific  information,  show  our  manu- 
facturers where  their  opportunities  lie,  thus  greatly 
assisting  the  individual  in  his  foreign  trade  efforts. 
Equally  certain  is  it  that  the  establishment  of 
foreign  banks  and  international  steamship  lines 
should  be  encouraged.  When,  however,  the  Govern- 
ment is  urged  to  constitute  itself  an  agency  for  do- 
ing for  the  manufacturer  the  things  that  he  not  only 
ought  to,  but  must  do  for  himself,  or  the  manu- 
facturer is  led  to  believe  that,  until  Washington  gets 
back  of  the  pet  projects  of  advocates  of  the  nation- 
alization of  foreign  trade,  it  is  useless  for  him  to 
attempt  to  accomplish  very  much,  the  tendency  will 


12    AMERICAN  METHODS  IN  FOREIGN  TRADE 

be  toward  a  lessening  of  individual  effort  resulting 
in  a  great  loss  of  prospective  trade. 

The  time  will  never  come  when  the  foreign  dis- 
tributor or  consumer  Avill  to  any  appreciable  extent 
buy  American,  German  or  English  products  because 
they  are  such.  The  first  consideration  with  the  user 
is  the  quality  and  service  of  the  article  purchased. 
The  distributor  is  influenced,  not  only  by  the  same 
desirable  characteristics,  but  also  by  the  expecta- 
tion of  consequent  continuity  and  increase  of  profit 
for  those  who  handle  the  article.  A  national  reputa- 
tion for  inventive  genius  and  quality  of  manufac- 
tured products  and  the  existence  of  adequate  bank- 
ing and  shipping  facilities  are  helpful,  but  the  first 
thought  of  the  foreign  importing  and  distributing 
house  is  the  standing  of  each  firm  that  constitutes  a 
source  of  supply  for  needed  lines  of  goods,  regard- 
less of  its  nationality. 

The  truth  of  this  is  recognized  by  all  successful 
American  export  managers,  for  it  is  they  who,  years 
ago,  in  spite  of  the  supposedly  fatal  handicap  of 
low-price,  long-credit  competition,  the  lack  of  an 
American  merchant  marine  and  international  bank- 
ing facilities  and  the  great  difficulty  of  obtaining 
the  information  on  which  to  base  a  practical  selling 
campaign  having  for  its  aim  the  upbuilding  of  a 
distributing  organization,  went  boldly  into  foreign 
markets,  in  person  or  by  the  written  and  printed 
word,  met  price  objections  with  quality  and  service 
arguments,  expressed  their  willingness  to  extend 
reasonable  credits  while  arguing  against  unwar- 
ranted extensions  as  bad  for  all  concerned,  showed 
how,  if  their  goods  were  imported  in  sufficient  quan- 


WHY  A  NATIONALIZED  FOREIGN  TRADE?    13 

titles,  existing  banks  and  steamship  lines  would  do 
their  part,  for  the  profit  involved  if  for  no  other 
reason,  and  in  general  stood  by  their  gnns. 

They  found  some  advance  interest  in  American 
goods,  partly  because  of  the  national  reputation  for 
doing  things  well  and  partly  because  many  firms 
were  dissatisfied  with  the  quality  of  European  lines 
or  saw  an  opportunity  of  securing  their  business 
independence  by  taking  some  of  their  eggs  out  of 
the  capacious  and  greedy  German  basket.  Once  con- 
vinced by  the  only  arguments  the  American  manu- 
facturer had,  valuable  connections  were  made  and 
so  satisfactory  were  the  goods  supplied  and  the 
service  given,  that  before  the  outbreak  of  the  Great 
War,  the  importations  of  American  manufactured 
goods  in  Latin  America  were  second  only  to  those 
of  English  origin  and  rapid  gains  were  being  made 
all  over  the  world. 

In  nearly  fourteen  years  of  intimate  acquaintance 
with  scores  of  American  foreign  salesmen  and  sales 
managers,  the  writer  has  yet  to  learn  of  a  genuine 
instance  of  failure  to  get  a  foothold  in  a  foreign 
market,  due  to  price  competition,  the  long-credit 
bugbear  or  the  lack  of  shipping  or  banking  facilities. 
Nor  can  one  find  among  our  successful  export  men 
any  feeling  regarding  German  exporters  but  calm 
self-confidence  oftentimes  tinged  with  the  contempt 
for  their  methods  that  is  invariably  born  of  intimate 
familiarity  with  them. 

Again  it  should  be  stated  that  no  argument 
against  an  American  merchant  marine,  foreign 
banks  or  other  desirable  facilities,  is  here  intended. 
The  contention  is  that  all  these  things  are  at  the 


14    AMERICAN  METHODS  IN  FOREIGN  TRADE 

best  but  important  tools  of  the  exporter.  The  better 
the  tools,  the  better  the  work  done,  but  the  essential 
things  are  willingness  on  the  part  of  the  individual 
to  do  the  work  and  the  ability  to  do  it  right,  if  given 
the  tools. 

During  the  time  that  our  pioneer  exporters  were 
laying  the  foundation  of  their  great  successes,  the 
public  heard  little  of  them,  but  did  hear  a  great  deal 
about  those  foreign-competition-fearing  manufac- 
turers, who,  timidly  entering  the  world-trade  field 
entirely  unequipped  to  grapple  with  its  problems  and 
not  sufficiently  interested  to  find  out  how  to  meet 
them,  provided  our  lame-duck  consuls  and  returning 
tourists  of  that  era  with  material  for  their  endlessly 
repeated  lectures.  We  have  heard  altogether  too 
much  about  American  failures  in  export.  It  is  high 
time  that  we  studied  the  successes,  for  only  by  the 
general  inculcation  of  the  principles  and  methods  on 
which  they  are  based,  can  we  ever  attain  our  destiny 
in  the  field  of  international  commercial  exchange. 

Admirers  of  German  trade  methods  are  either 
dazzled  by  their  spectacular  but  temporary  results 
into  disregard  of  the  basic  principles  of  good 
business  or  are  at  heart  undemocratic,  believing  that 
the  mass  of  mankind  do  not  know  what  is  good 
for  them  and  that  the  chosen  few  should  rule,  not 
only  politically,  but  commercially.  If  democracy  is 
to  be  the  political  creed  of  the  future,  if  government 
can  only  derive  its  just  powers  from  the  consent  of 
the  governed,  then  the  industry  of  the  future  must 
also  be  regulated,  not  to  serve  only  the  ends  of 
those  who  control  it,  but  the  welfare  of  those  who 
participate  in  it,  either  as  workers  or  consumers. 


WHY  A  NATIONALIZED  FOREIGN  TRADE?    15 

And  time  will  show  the  consumer  masses  at  home  and 
abroad  to  be  the  more  important  factor  because  the 
more  numerous.  The  day  is  not  far  off  when  it  will 
be  clearly  seen  that  to  manage  an  industry  for  the 
welfare  of  its  workers  alone  is  just  as  wrong  in 
principle  as  to  consider  only  the  interests  of  the 
few  who,  because  of  fortunate  inheritance  or  special 
ability,  control  its  policies.  On  the  general  recog- 
nition and  the  active  and  intelligent  practice  of  this 
principle  depends  America's  future  in  world  trade. 


CHAPTER  m 

THE  WEBB-POMERENE  ACT  AND  COMBINA- 
TIONS IN  FOREIGN  TRADE 

The  fact  that,  while  we  combated  political  Ger- 
many, her  intellectual  invasion  of  this  country  con- 
tinued, was  evidenced  by  the  passage  of  the  Webb- 
Pomerene  Act.  Without  going  into  any  detailed 
analysis  of  this  measure,  it  may  be  described  as 
purporting,  by  the  nullification  of  the  Sherman  Law 
so  far  as  export  trade  is  concerned,  to  enable  manu- 
facturers to  combine  legally  to  secure  for  themselves 
the  so-called  advantages  of  the  German  cartel 
system. 

The  cartel  system  is  essentially  a  legalized  com- 
bination in  restraint  of  trade.  It  is  in  line  with  the 
German  idea  of  achievement  by  mass  attack  rather 
than  by  individual  consideration  for  the  greatest 
good  of  the  greatest  number  of  those  who  build  up 
or  support  a  government,  industry  or  other  human 
institution.  The  constituent  members  of  a  cartel 
are  presumptively  able,  by  price-fixing  and  other 
devices  familiar  to  the  American  public,  to  conduct 
a  ruthless  campaign  against  competitors  and  turn 
the  power  thus  built  up  against  consumers. 

Characterizations  of  the  Webb-Pomerene  Act  by 
export  managers  range  all  the  way  from  denuncia- 

16 


THE  WEBB-POMERENE  ACT  17 

tion  as  a  flank  attack  on  the  principles  embodied  in 
the  Sherman  Law  by  those  who  are  interested  in 
its  moral  nullification  or  legal  repeal,  to  expression 
of  the  opinion  that  it  may  be  of  benefit  to  some 
manufacturers.  It  is  a  striking  fact  that  few  if  any 
foreign  sales  managers,  who  have  built  up  a  good 
business,  consider  it  of  any  value  in  their  particular 
line. 

It  must  be  admitted  that  no  one  who  believes  in 
the  principles  underlying  our  anti-trust  legislation, 
and  at  the  same  time  looks  upon  all  people  every- 
where as  entitled  to  justice,  could  honestly  advocate 
a  measure  like  the  Webb-Pomerene  Act,  and  that 
even  those  who  do  not  approve  of  the  Sherman  Law, 
still  had  no  right  to  induce  the  Government  to  put 
itself,  particularly  at  a  critical  period  in  our  inter- 
national relations,  in  the  inconsistent  position  of 
permitting  our  manufacturers  to  do  to  the  foreign 
consumer  who  has  no  vote  in  our  affairs,  what  can- 
not be  done  to  the  people  of  the  United  States,  whose 
constitutional  rights  enable  them  effectively  to  ex- 
press their  approval  or  displeasure. 

This  serious  violation  of  good  principle  has  had 
no  uncertain  effect  in  foreign  markets.  A  mass  of 
adverse  comment  has  accumulated  in  the  corre- 
spondence files  of  our  exporters  and  the  anti- Ameri- 
can press  everywhere  has  welcomed  this  apparent 
proof  of  the  selfish  character  of  our  national  aims. 
That  portion  of  our  press  that  advocated  this 
measure  has  been  kept  busy  explaining  that  their 
overseas  contemporaries  misunderstand  its  pur- 
port, pointing  out  that  certain  provisions  prevent 
any  violations  of  the  spirit  of  the  Sherman  Law. 


18    AMERICAN  METHODS  IN  FOREIGN  TRADE 

This  has  been  very  unconvincing  in  view  of  the  fact 
that  we  have  kept  the  Sherman  Law  in  force  at 
home.  That  our  alert  European  competitors  would 
fail  to  use  this  situation  to  their  advantage  was 
scarcely  to  have  been  expected. 

The  existence  of  cartels  in  Germany  offered  no 
moral  justification  of  the  Webb-Pomerene  Act. 
That  country  was  not  highly  regarded  as  a  moral 
mentor  and  the  system  was  not,  as  a  matter  of  fact, 
exclusively  a  foreign  trade  device.  The  cartels 
operated  in  the  home  market  as  well  as  abroad. 
Our  Government  should  have  had  the  courage  either 
to  repeal  the  Sherman  Law  altogether  or  refuse  to 
sanction  any  departure  from  its  principles.  Wrong 
does  not  become  right  beyond  our  frontiers. 

That  one  of  these  measures  must  eventually  be 
either  repealed  or  ignored,  seems  so  evident  as  not 
to  need  exposition.  Counsel  for  a  large  combina- 
tion, in  an  argument  before  the  Supreme  Court, 
referred  to  the  Webb-Pomerene  Act  soon  after  its 
passage  as  justifying  in  principle  the  acts  for  which 
the  Government  was  prosecuting  his  client  under 
the  provisions  of  the  Sherman  Law.  That  two 
measures  so  contradictory  morally  can  long  remain 
on  the  books  and  be  effective,  is  incredible. 

Whatever  the  real  intent  of  the  sponsors  of  the 
Webb-Pomerene  Act,  the  hope  that  it  would  be  help- 
ful to  small  competing  manufacturers  seems  to  have 
been  doomed  to  disappointment  except,  possibly,  in 
the  case  of  producers  of  raw,  staple  or  standardized 
products,  which,  possessing  little  or  no  individuality, 
must,  to  some  extent,  meet  price  competition.  Such 
lines,  however,  owing  to  constantly  increasing  home 


THE  WEBB-POMERENE  ACT  19 

consumption,  have  constituted  a  steadily  lessening 
percentage  of  our  total  exports. 

As  previously  pointed  out,  our  future  in  the  field 
of  foreign  trade  depends  not  on  our  ability  to  meet 
price  competition,  but  to  sell  quality  goods  for  a 
fair  price  by  the  scientific  upbuilding  of  distribution 
and  enlightened  regard  for  the  welfare  of  all  con- 
cerned. To  believe  that  a  number  of  small  manu- 
facturers of  such  goods,  continuing  to  compete  at 
home,  can  harmonize  their  varying  standards  to 
combine  under  the  provisions  of  the  Webb-Pomerene 
Act  and  secure  such  a  trade,  is  a  severe  strain  on 
the  credulity  of  the  experienced  business  man.  The 
best  they  can  hope  to  accomplish  is  to  reduce  selling 
expense  (no  initial  reductions  in  production  costs 
are  possible),  and  for  the  sake  of  increased  output, 
lower  their  prices  to  a  point  where  the  combination 
may  get  some  business  on  the  German  low-price 
basis.  Such  a  trade,  however,  would  sooner  or  later 
be  limited  or  wiped  out  by  the  advance  of  the  en- 
lightened competition  of  quality  goods. 

The  Webb-Pomerene  Act  was  at  the  worst 
estimate  a  deliberate  departure  from  principle  with 
ulterior  motives.  At  its  best  it  was  a  misguided 
attempt  to  benefit  our  manufacturers  which  will  fail 
because  it  was  based  on  the  misconception  that  suc- 
cess in  foreign  selling  depends  on  meeting  price 
competition  and  ignored  the  real  trend  of  modern 
world  trade. 

Export  combinations  of  manufacturers  of  non- 
competing  but  allied  lines  have  long  existed.  Some 
of  these  have  been  deliberate  and  intentional  crea- 
tions and  others  gradual  developments.    Occasion- 


20    AMERICAN  METHODS  IN  FOREIGN  TRADE 

ally,  an  exporting  manufacturer,  in  his  endeavor  to 
co-operate  with  foreign  customers,  has  made  pur- 
chases of  other  lines  for  which  such  clients  had  no 
regular  sources  of  supply.  This  led  to  securing  the 
export  sales  representation  for  many  of  such 
products  and  sometimes  to  the  transfer  of  all  over- 
seas selling  operations  to  a  separate  company 
specially  formed  for  the  purpose. 

Export  combinations  gradually  evolved  in  this 
way  are  much  more  likely  to  be  satisfactory  than 
are  those  that  spring  full-fledged  from  the  activities 
of  a  promoter.  There  are  some  instances  where 
success  has  attended  the  efforts  of  several  non- 
competing  manufacturers  who  combined  to  form  an 
export  company  and  took  it  upon  themselves 
as  controlling  stockliolders  and  directors,  to  oversee 
the  development  of  a  pre-determined  business  policy. 

It  is,  however,  probable  that  most  of  the  success- 
ful combinations  of  non-competing  manufacturers 
are  those  that  center  around  the  activities  of  export 
selling  agents  as  described  in  Chapter  V.  Every  sell- 
ing agent  as  he  progresses  is  inclined  to  take  on 
lines  allied  to  those  he  already  represents  with  the 
result  that  in  due  course  he  constitutes  a  bond  be- 
tween the  makers  of  each  product  he  sells,  they,  ex- 
cept through  him,  having  no  relations  with  each 
other.  Each  firm,  having  its  own  satisfactory  ar- 
rangement with  him  and  concerning  itself  not  at  all 
with  the  separate  agreements  between  him  and  the 
makers  of  other  lines,  continues  to  look  upon  him 
as  its  export  manager  as  long  as  the  volume  of  trade 
is  satisfactory,  quite  regardless  of  what  he  is  doing 
for  others.    Such  loosely  held  combinations  have  a 


THE  WEBB-POMERENE  ACT  21 

flexibility  that  the  formally  organized  export  com- 
panies lack  and  they  may  be  built  up  gradually,  as 
opportunities  to  take  on  new  lines  present  them- 
selves, without  the  necessity  of  undue  risk  to  anyone 
concerned. 


CHAPTER  IV 
THE  EXPOET  COMMISSION  HOUSE 

The  first  step  usually  taken  by  an  American 
manufacturer  who  contemplates  a  foreign  selling 
campaign  is  to  interview  several  of  the  so-called 
export  commission  houses.  Almost  every  estab- 
lished and  reputable  producer  receives  from  such 
firms  occasional  unsolicited  orders  and  it  is  but 
natural  that,  when  attempting  to  build  up  a  foreign 
demand  for  any  product,  the  maker  should  follow  the 
lines  of  least  resistance  and  confer  with  the  ap- 
parent sources  of  such  overseas  orders  as  have 
previously  been  filled. 

The  many-sided  and  varying  institutions  to  which 
the  term  '* Export  Commission  House"  is  popularly 
applied,  represent  facilities  of  great  potential  value 
to  the  novice  in  foreign  trade,  but  sometimes  they 
also,  wittingly  or  unwittingly,  constitute  obstacles 
or  pitfalls  in  his  path  if  he  docs  not  understand  the 
character  of  the  functions  they  perform.  It  is  there- 
fore essential  that  the  export  pilgrim,  looking  for 
the  path  which  leads  to  his  foreign  trade  paradise, 
gain  the  fullest  possible  knowledge  of  them  and  their 
possibilities  for  good  and  evil. 

The  development  of  manufacturing  in  the  United 
States  during  the  latter  half  of  the  Nineteenth  Cen- 
tury, marvelous  as  it  was,  ran  but  a  neck-and-neck 

22 


THE  EXPORT  COMMISSION  HOUSE         23 

race  with  domestic  demand.  A  surplus  that  could 
be  exported  was  at  times  produced  in  many  lines, 
but  there  were  few  individual  cases  in  which  such 
production  was  sufficiently  continuous  to  justify  a 
determined  effort  on  the  part  of  the  maker  to  get 
into  foreign  markets.  Those  who,  by  chance  or 
otherwise,  made  good  overseas  connections  often 
found  themselves  swamped  with  domestic  orders, 
and,  not  foreseeing  the  time  when  they  might  want 
export  business  year  in  and  year  out,  neglected  their 
new-found  customers. 

Yet  a  foreign  demand  for  many  kinds  of  Ameri- 
can manufactured  goods  persisted.  So  great  was 
our  reputation  for  inventive  genius  and  fabricating 
skill,  that  it  could  not  be  killed  even  by  the  atrocious 
practice,  at  one  time  quite  prevalent,  of  dumping  on 
the  foreign  market  defective  or  obsolete  stocks. 

The  irresistible  force  of  this  demand  met  the  im- 
movable body  of  lack  of  continued  interest  on  the 
part  of  our  manufacturers.  Something  had  to  hap- 
pen, and  what  happened  was  the  export  commission 
house. 

The  export  commission  house  was  originally  and 
still  is,  in  theory  at  least,  the  resident  representa- 
tive of  foreign  exporting  and  importing  firms.  It 
disposed  of  shipments  to  this  market  and  sent  back 
American  products  as  ordered,  all  on  a  stated  com- 
mission. As  a  selling  agent,  its  duty  to  its  clients 
obliged  it  to  secure  the  highest  possible  prices  for 
import  consignments,  and,  as  a  purchasing  agent,  the 
lowest  possible  prices  on  American  goods  ordered 
for  export. 

These  functions  naturally  led  many  export  com- 


24    AMERICAN  METHODS  IN  FOREIGN  TRADE 

mission  houses  into  other  activities,  the  first  of 
which  were  international  banking  and  shipping. 
Some  of  them,  starting  as  commission  houses, 
developed  into  trading  companies  of  the  European 
type,  with  branches  and  stocks  of  goods  in  various 
parts  of  the  world,  and  others  acting  as  tra- 
ding companies  in  some  countries,  developed  a  com- 
mission business  in  others. 

As  our  manufacturers  became  more  interested  in 
overseas  markets,  there  came  into  existence  the  ex- 
port selling  agent,  whose  exclusive  function  it  was  to 
promote  the  foreign  distribution  of  the  various  prod- 
ucts he  represented.  The  success  of  these  newcomers 
led  many  export  commission  houses  to  take  the  sales 
agency  for  various  lines,  and  many  of  those  who 
were  originally  selling  agents  gained  the  confidence 
of  foreign  firms  and  began  acting  as  purchasing 
representatives  for  goods  for  which  they  did  not 
have  an  agency,  thus  acquiring  the  character  of  an 
export  commission  house. 

As  a  result  of  all  this,  there  is  a  great  deal  of 
confusion  in  the  minds  of  American  manufacturers 
as  to  what  is  meant  by  the  term  "Export  Commis- 
sion House,"  for  it  is  applied  loosely  to  inter- 
national trading  companies,  foreign  importers' 
resident  buying  representatives  and  American 
manufacturers'  export  selling  agents.  To  add  to 
the  obfuscation,  the  same  firm  sometimes  appears 
in  several  or  all  of  these  roles  in  different 
transactions. 

The  important  point  for  the  manufacturer  to 
keep  in  mind  is  what  function  a  given  firm  proposes 
to  perform,  regardless  of  what  it  calls  itself.    Only 


THE  EXPORT  COMMISSION  HOUSE  25 

by  doing  so  can  he  decide  how  and  to  what  extent 
it  may  fit  in  with  his  previously  formulated  export 
selling  policy. 

The  relation  of  the  several  types  of  export  com- 
mission houses  to  a  sound  selling  campaign  will 
later  be  shown  in  the  chapters  in  which  policy  is 
discussed.  It  may  be  here  stated,  however,  that  the 
American  foreign  sales  manager  believes  in  the  ex- 
port commission  house  and  his  belief  is  based,  not 
on  the  absurd  sentimentality  that  because  the  in- 
stitution has  in  the  past  done  much  for  American 
manufacturers  it  should  now  be  supported,  but  on 
the  unquestioned  fact  that  it  not  only  plays  a  role 
of  great  usefulness  today,  but  also  will  always  form 
a  necessary  part  of  our  foreign  trade  machinery. 

Both  the  international  trading  company,  which 
buys  where  it  can  to  the  best  advantage  and  sells  to 
anyone  whose  business  needs  make  it  worth  while, 
and  the  resident  buying  house,  which  purchases, 
finances  and  ships  on  orders  from  overseas  clients, 
make  possible  a  large  volume  of  foreign  trade  which 
can  only  be  handled  in  this  way.  The  manufacturer 
who  can  secure  a  share  of  this  business  without  inter- 
ference with  his  agents  or  other  detrimental  effect 
on  the  machinery  of  his  overseas  distribution  should 
do  so.  That  the  export  commission  house  exists  is 
proof  of  its  usefulness,  and  the  attitude  toward  it 
of  the  manufacturer  engaged  in  direct  exporting 
should  be  one  of  strict  neutrality.  The  bad  judg- 
ment of  the  radical  direct  exporters  who  refuse  to 
accept  any  orders  whatever  through  such  established 
channels  is  only  equaled  by  that  of  the  ultra  con- 
servatives who  insist  that  all  overseas  customers 


26    AMERICAN  METHODS  IN  FOREIGN  TRADE 

deal  through  these  intermediaries  only.  It  is  to  be 
assumed  that  each  foreign  customer  knows  from 
experience  how  to  buy  to  the  best  advantage  and, 
unless  the  circumstances  are  very  unusual,  no  in- 
fluence favorable  or  unfavorable  to  export  commis- 
sion houses  should  be  brought  to  bear  on  him  by 
those  who  constitute  his  original  sources  of  supply. 


CHAPTER  V 
THE  EXPORT  SELLING  AGENT 

The  manufacturer  who  contemplates  an  aggressive 
export  selling  campaign  must  first  decide  whether 
he  will  place  the  management  of  it  in  the  hands  of 
a  sales  representative  or  entrust  the  handling 
of  details  to  a  salaried  employee  in  his  own  office. 

There  are  many  points  for  and  against  the  ap- 
pointment of  an  exclusive  export  agent.  A  good  one 
who  has  handled  lines  allied  to  the  one  newly  taken 
on  is  often  in  a  position,  through  previously  formed 
connections  with  foreign  buying  houses,  to  make 
short  cuts  to  immediate  profitable  business  by  the 
elimination  of  the  necessity  of  establishing  the 
standing  of  the  maker  and  the  quality  of  his  product. 
He  should  very  soon  secure  a  considerable  volume 
of  trade  by  virtue  of  his  own  acquaintance  with 
foreign  buyers. 

A  beginning  in  overseas  trade  can  perhaps  be  made 
more  economically  through  a  fortunate  connection 
of  this  kind  than  in  any  other  way.  In  addition  to 
the  advantage  of  probable  immediate  orders,  the 
export  selling  agent,  whose  organization  is  virtually 
a  combination  foreign  sales  department  for  all  his 
manufacturing  connections,  is  enabled  to  effect 
economies  in  overhead,  office  detail  work,  circulariz- 

27 


28    AMERICAN  METHODS  IN  FOREIGN  TRADE 

ing,  employment  of  salesmen  and  other  means  of 
securing  and  handling  orders. 

The  export  selling  agent,  if  efficient,  will  also 
avoid  the  sometimes  costly  blunders  and  delays  that 
so  frequently  characterize  the  early  foreign  trade 
activities  of  our  manufacturers. 

There  are,  however,  certain  drawbacks  and  risks 
incident  to  the  policy  of  placing  an  export  campaign 
in  the  hands  of  an  independent  organization.  The 
immediate  object  of  the  manufacturer  should  not 
be  sales  and  profits,  but  the  systematic  up-building 
of  good  will  and  distribution.  If  he  has  the  con- 
fidence in  his  line  that  every  good  American  maker 
should  have,  he  mil  regard  the  satisfying  of  the 
existing  demand  for  goods  such  as  he  makes,  not 
as  the  consummation  of  his  efforts  but  rather  as 
one  of  the  means  of  developing  an  organization  with 
which  he  can  co-operate  for  the  benefit  not  only  of 
himself  and  his  distributors,  but  of  consumers.  In 
other  words,  while  taking  such  incidental  profits  as 
he  legitimately  can,  he  must  keep  in  mind  w^hat  he 
wants  to  accomplish  eventually.  For  what  will  it 
profit  him  if  he  obtains  many  orders  the  first  year 
but  loses  the  greater  opportunity  of  placing  himself 
in  an  invincible  position  in  foreign  markets? 

The  policy  of  the  maker  is  an  important  factor 
in  foreign  trade  and  the  export  manager  closely 
identified  with  his  finn  is  usually  a  better  interpreter 
of  it  than  is  a  selling  agent.  The  latter 's  contract 
must,  for  obvious  reasons,  have  a  time  limit  which 
means  that  he  is  constantly  tempted  to  regard  the 
profitable  order  in  hand  as  worth  more  than  several 
in  the,  to  him,  uncertain  future.     This   attitude 


THE  EXPORT  SELLING  AGENT  29 

may  sometimes  create  a  situation  in  foreign  mar- 
kets which  it  will  take  a  manufacturer  years  of 
effort  to  overcome.  An  independent  selling  repre- 
sentative, working  under  a  temporary  agreement,  is 
not  often  inclined  to  do  the  things  that  spell  only 
expense  in  the  present,  but  which  may  mean  great 
advantage  to  the  maker  at  a  future  time  when  the 
agent  will  perhaps  no  longer  be  in  a  position  to 
claim  the  reward  for  his  foundation-laying  work. 

It  may  be  argued  that  the  right  type  of  export 
selling  agent  will  be  sufiSciently  far-seeing  to  recog- 
nize that  his  future  depends  on  the  success  of  his 
manufacturing  clients.  There  is  some  theoretical 
truth  in  this,  but  it  is  offset  by  the  fact  that  every 
such  agent  has  had  the  experience  of  losing  accounts 
for  which  he  had  done  good  work  because  someone 
else  promised  more  or  the  client  desired  to  assume 
direct  control  of  his  foreign  trade. 

An  agent  who  represents  many  lines  is  also  open 
to  the  criticism  of  divided  interest  and,  from  any 
one  client's  point  of  view,  presents  the  same  un- 
desirable aspects  as  the  salesman  who  handles  a 
number  of  side  lines. 

There  also  exists  the  objection,  whose  reality  has 
been  shown  by  the  experience  of  many  manufac- 
turers, that  the  exclusive  export  agent  who  keeps 
complete  control  of  the  business  developed  has  the 
power  of  life  or  death  over  it  and  can,  in  retaliation 
for  real  or  fancied  wrongs,  hold  up  his  client  for 
increased  commissions  or  impose  other  similar  bur- 
dens on  him.  This  leads  to  a  situation  of  watchful 
waiting  on  the  part  of  the  manufacturer  for  an 
opportunity  of  undermining  the  agent,  in  order  to 


30    AMERICAN  METHODS  IN  FOREIGN  TRADE 

acquire  liis  own  hold  on  the  trade  and  on  the  part 
of  the  agent  to  prevent  this  outcome.  Such  opposi- 
tion of  interests  can  hardly  be  regarded  as  con- 
structive. 

Like  the  export  commission  house,  the  selling 
agent  serves  a  very  useful  purpose.  There  are  and 
always  will  be  a  large  number  of  manufacturers  who 
will  not  themselves  make  any  earnest  attempt  to 
get  a  foothold  in  foreign  markets,  but  who  will  co- 
operate with  someone  else  in  selling  their  products. 
The  aggregate  volume  of  business  developed  in  this 
way  is  very  large.  Generally  speaking,  however, 
the  manufacturers  who  are  the  leading  exporters  of 
their  lines  have  entrusted  their  future  to  their  own 
foreign  sales  manager  either  from  the  beginning  or 
after  a  start  had  been  made  in  some  other  way. 

There  are  some  export  selling  agents  whose 
efficiency,  progressiveness  and  high-mindedness 
have  been  such  that  they  have  achieved  wonderful 
success  and  their  relations  with  their  clients  closely 
approximate  those  of  a  foreign  sales  manager. 

As  in  all  other  business  relations,  the  practical 
results  obtained  by  making  a  connection  with  an 
export  selling  agent  must  of  course  vary  greatly 
with  the  character  and  ability  of  the  man  selected. 
As  a  rule  the  representative  who  builds  up  some 
business  for  a  client  only  to  lose  the  connection  at 
the  expiration  of  his  contract,  should  take  it 
philosophically.  The  existence  of  a  pre-arranged 
time  limit  is  a  mutual  recognition  that  such  a  pos- 
sibility existed  from  the  first.  If  the  change  is  to  the 
advantage  of  the  principal,  the  agent  has  no  moral 
right  to  stand  in  the  way  and  if  it  is  not,  the  door 


THE  EXPORT  SELLING  AGENT  31 

should  be  left  open  for  his  return  to  the  fold,  from 
which,  having  once  departed  to  his  disadvantage, 
he  will  scarcely  be  inclined  to  stray  a  second  time. 
The  success  of  the  relation  between  manufacturer 
and  export  agent  depends  to  an  exceptional  degree 
on  fair-mindedness  and  consideration  of  the  other 
man's  point  of  view  on  the  part  of  both  parties 
to  the  arrangement.  The  former  must  give  the  lat- 
ter his  due  at  all  times  and  the  latter  must  con- 
stantly keep  in  mind  the  fact  that  he  cannot  make 
a  permanent  success  if  he  yields  to  the  ever-recur- 
ring temptations  to  increase  his  own  profits  at  the 
expense  of  the  best  interests  of  his  clients  or  his 
foreign  customers. 


CHAPTER  VI 

THE  EXPORT  MANAGER  AND  THE  EXPORT- 
ING MANUFACTURER 

The  successful  export  manager  closely  identified 
with  the  manufacturer's  selling  organization  is 
either  a  man  (or  woman,  for  several  women  are 
prominent  in  this  field)  who  in  the  course  of  his 
work  developed  into  a  good  business  man,  saturated 
with  American  ideas  and  ideals,  or  one  who  reached 
this  stage  of  development  in  domestic  w^ork  and  later 
turned  his  attention  to  the  foreign  trade  field. 

He  is  usually  an  American  by  birth  or  at  least 
in  training.  There  are  a  few  notable  exceptions  of 
foreign  antecedents,  but  they  are  in  every  instance 
men  of  great  adaptability  and  open-mindedness  who 
quickly  assimilated  American  methods  and  prin- 
ciples and  made  them  the  mainspring  of  their  work- 
ing equipment. 

The  manager  of  foreign  sales  who  has  in  the  past 
been  responsible  for  the  great  world  trade  of  many 
of  our  manufacturers  did  not  as  a  rule  bring  to  his 
task  a  knowledge  of  export  or  any  special  ac- 
quaintance with  overseas  markets.  Usually  he  had 
not  had  any  special  training  for  the  work.  His  start 
was  much  like  that  of  any  young  American  in  other 
branches  of  business  endeavor.  His  chief  equip- 
ment was  an  early  training  in  our  traditions,  innate 

32 


THE  EXPORT  MANAGER  33 

breadth  of  vision  and  a  good  education  in  the  funda- 
mentals at  least.  His  success  was  simply  a  normal 
manifestation  of  the  American  genius  for  salesman- 
ship in  a  new  field. 

It  would  be  idle  to  deprecate  the  great  value  of 
special  training  in  overseas  selling  and  some  very 
valuable  work  has  been  done  along  these  lines.  More 
should  and  will  be  accomplished.  Nevertheless  an 
acquaintance  with  export  sales  methods,  the  theory 
of  good  export  practice,  foreign  languages,  overseas 
trade  facilities  and  conditions  in  world  markets  can 
always  be  acquired  and  is  secondary  in  importance 
to  the  character  and  caliber  of  the  man.  Some  of 
the  greatest  failures  in  the  history  of  American  ex- 
porting have  been  made  by  men  with  an  ideal  equip- 
ment and  training  who  did  not  naturally  and  readily 
comprehend  all  humanity  in  their  scheme  of  life — 
men  to  whom  frontiers  were  real  rather  than  im- 
aginary lines. 

Lack  of  a  high  order  of  executive  ability  will  mar 
an  otherwise  ideal  equipment  and  training  for  the 
work  of  an  export  manager.  There  is  a  field  for 
such  men — that  of  the  export  technician  who  serves 
as  the  export  manager's  right-hand  man,  relieving 
him  of  the  burden  of  supervising  the  details  of  the 
work  of  the  department.  In  a  highly  developed  or- 
ganization the  export  manager  should  be  the  strate- 
gist whose  field  operations  are  carried  out  in  all 
markets  by  one  or  more  tacticians  who  for  want  of 
a  better  name  have  come  to  be  called  export  techni- 
cians. It  is  needless  to  say  that  any  tactician  may 
with  experience  develop  strategic  ability. 

To  achieve  a  lasting  success  in  export  sales  work 


34    AMERICAN  METHODS  IN  FOREIGN  TRADE 

is  one  of  the  severest  tests  of  character.  Without 
possessing  in  some  degree  such  qualities  as  breadth 
of  vision,  executive  ability,  a  fair  and  open  mind, 
ingenuity,  farsightedness,  systematic  industry, 
patience,  intellectual  and  moral  honesty  and  prac- 
tical idealism,  only  a  moderate  success  can  at  best 
be  achieved. 

To  erect  a  strong  trade  structure  in  other  lands, 
the  export  manager  must  have  the  breadth  of  vision 
which  will  enable  him  to  project  himself  into  the 
environment  of  distributors  and  consumers  there, 
examine  all  questions  from  their  point  of  view  and 
harmonize  them  with  the  legitimate  interests  of  his 
own  firm. 

He  must  have  executive  ability,  multiplying  him- 
self through  subordinates  in  order  that  his  con- 
stantly increasing  volume  of  trade  may  be  so 
handled  that  the  spirit  of  his  successful  policy  may 
not  be  transformed  into  a  perfunctory  attention  to 
customers'  expressed  requirements. 

He  must  at  all  times  be  not  only  fair  from  his 
o^vn  point  of  view  but  also  make  it  very  clear  that 
his  mind  is  open — that  he  has  no  opinions  or  ideas 
that  are  not  subject  to  revision  or  rejection  if  sound 
reasons  are  advanced  for  so  doing.  Hasty  decisions 
that  either  will  not  stand  careful  analysis  or  have 
the  appearance  of  unfairness,  however  just  they 
may  be  if  all  the  facts  are  known,  have  a  disastrous 
influence  on  relations  with  foreign  buyers  whose 
geographical  remoteness  make  man-to-man  talks  a 
practical  impossibility. 

The  export  manager  must  be  ingenious.  There 
frequently  arise  unexpected  situations  where,  for 


THE  EXPORT  MANAGER  35 

tlie  good  of  all  concerned,  something  out  of  the  or- 
dinary must  be  done.  Outside  of  the  limited  oppor- 
tunity offered  by  cable  service,  it  is  impossible  to 
consult  with  the  customer  and  the  man  who  in  such 
cases  makes  a  practice  of  cabling  for  instructions 
instead  'Of  asking  for  explicit  approval  of  some 
definite  step  that  he  himself  believes  advisable,  will 
never  achieve  results  out  of  the  ordinary. 

The  farsighted  man  will  of  course  prepare  in 
advance  to  deal  with  such  emergencies  insofar  as 
it  is  humanly  possible  to  anticipate  them.  There 
were  many  instances  while  the  World  War  was  be- 
ing waged  where  an  export  manager,  foreseeing  the 
effect  of  war  conditions  on  his  line  of  industry,  was 
able  to  do  his  foreign  distributors  a  signal  service 
by  his  forehanded  advice. 

It  is  not  enough,  however,  to  be  able  to  take  the 
other  man's  point  of  view  and  know  how  to  co- 
operate with  him,  for  many  who  can  if  they  will, 
do  not  do  this.  Only  the  really  industrious  and 
systematic  man  can  spare  the  time  not  only  to  think 
for  his  customers  but  to  act  in  their  interest.  The 
great  distances  involved  make  the  procrastination 
of  the  lazy  a  serious  obstacle  to  the  development  of 
foreign  trade. 

He  who,  having  done  all  possible  to  accomplish  an 
object,  does  not  know  how  to  await  results  with 
tranquillity  has  no  place  in  export  work.  Patience 
is  an  important  factor  in  foreign  trade  building. 
Overseas  buyers,  accustomed  to  other  lines  which 
are  in  demand  in  their  communities,  would  in  the 
long  run  be  very  undesirable  people  for  anyone  to 
do  business  with  if  they  were  inclined  to  take  on 


36    AMERICAN  METHODS  IN  FOREIGN  TRADE 

new  sources  of  supply  overnight.  Entirely  new 
lines  may  of  course  be  added  much  more  quickly  in 
comparison,  though  even  here  the  necessity  of 
educational  work  on  the  part  of  the  manufacturer, 
the  time  required  by  the  importer  for  an  investiga- 
tion of  the  possibilities  in  the  territory  he  serves, 
the  careful  estimation  of  his  own  ability  to  finance 
the  increased  business  and  other  similar  considera- 
tions cause  delays  that  tax  the  patience  of  the  ex- 
port manager  to  the  limit. 

Nothing  can  have  a  more  disastrous  effect  on  an 
export  selling  campaign  than  intellectual  or  moral 
dishonesty  on  the  part  of  the  man  in  charge  of  it. 
Temporary  success  may  result  but  time  is  sure  to 
reveal  serious  defects  in  the  distributing  machinery 
built  by  such  a  workman. 

Practical  idealism  plays  a  greater  part  in  foreign 
selling  than  in  almost  any  other  line  of  commercial 
endeavor.  Great  success  attends  the  efforts  of  the 
man  who  is  endowed,  to  any  considerable  degree, 
with  the  qualities  that  we  have  thus  far  considered, 
but  triumph  over  all  competition  waits  on  the  labors 
of  him  who  adds  to  them  a  broad  conception  of 
his  duty  to  humanity.  He  who,  possessing  many 
good  qualities  persists  in  using  them  for  essentially 
selfish,  even  though  enlightened  aims,  may  accom- 
plish much  in  international  commercial  exchange,  but 
he  is  a  pigmy  compared  to  the  man  who  has  the 
same  mental  and  moral  equipment  plus  the  all- 
pervading  influence  of  a  genuinely  sympathetic 
understanding  lof  his  brother  men  wherever  they 
may  be  and  whatever  their  race,  color,  customs  and 
environment. 


THE  EXPORT  MANAGER  37 

The  association  of  an  export  manager  who  to  any 
considerable  degree  embodies  these  characteristics, 
with  a  manufacturer  whose  standards  and  methods 
are  at  variance  with  all  that  he  sets  out  to  accom- 
plish, is  little  short  of  tragic. 

Such  a  manufacturer  not  only  does  not  deserve 
the  services  of  a  really  good  export  manager,  but 
for  his  own  material  good  should  not  have  them, 
because  to  him  they  are  not  worth  what  they  cost. 
No  matter  how  great  the  ability  of  the  man  or  how 
transcendent  the  excellence  of  his  innate  qualities 
and  acquired  training,  he  cannot,  thus  handicapped, 
wage  a  good  fight  for  world  trade.  He  must  have 
confidence  in  the  product  and  in  the  man  who  makes 
it.  He  cannot  send  beyond  our  frontiers  a  message 
that  he  does  not  first  receive.  He  camiot  success- 
fully preach  a  gospel  which  he  is  prevented  from 
living.  The  money  changer  may  desecrate  a  temple 
without  discomfort  to  himself,  but  the  high-minded 
man  whom  circumstances  force  to  live  in  a  brothel, 
either  ceases  to  be  himself  or  fights  his  way  intd 
better  surroundings. 

The  ideal  exporting  manufacturer  is  one  who  re- 
gards himself,  not  as  a  divinely  appointed  purveyor 
to  the  needs  of  other  less  able  men,  but  as  the 
privileged  director  of  facilities  of  production  that 
are  necessary  to  society's  welfare.  He  thinks  not 
so  much  of  his  rights  as  his  blessings,  not  so  much 
of  his  talents  themselves  as  of  what  they  can  do 
for  the  world,  humbly  acknowledging  that  the  quali- 
ties of  mind  that  make  him  a  leader  are  largely 
unearned  blessings  and  not  a  reason  for  deserved 
self -congratulation. 


38    AMERICAN  METHODS  IN  FOREIGN  TRADE 

The  ideal  exporting  manufacturer  is  a  believer  in 
industrial  democracy.  He  knows  that  he  is  honored 
by  the  power  to  control  and  direct  the  facilities 
which  his  own  or  ancestral  constructive  ability  has 
created.  He  knows  also  that  he  is  justly  entitled  to 
compensation  far  beyond  the  earnings  of  the  aver- 
age man.  But  with  all  tliis  there  is  the  realization 
that  he  owes  a  solemn  duty  to  the  thousands,  per- 
haps millions,  who  need  and  use  his  products,  that 
in  proportion  as  he  serves  he  will  be  rewarded  and 
that  partial  or  complete  failure  in  his  stewardship 
means  partial  or  complete  failure  for  him.  The 
ideal  exporting  manufacturer  is  he  who,  calm  in  his 
achieved  success  and  with  an  accurate  estimate  of 
himself  and  his  abilities,  goes  into  world  markets  not 
alone  to  make  the  profit  which  is  essential  to  prog- 
ress, but  also  because  he  would  be  false  to  himself 
if  he  overlooked  the  opportunity  of  taking  his  place 
in  the  far-flung  line  of  those  who  are  fighting  for 
human  advancement. 

By  these  standards,  the  manufacturer  who  con- 
templates the  building  up  of  world  distribution, 
should  measure  himself.  And  by  these  standards 
also,  should  he  be  measured  by  the  export  manager 
who,  having  first  satisfied  himself  as  to  his  o^vn 
qualifications,  undertakes  the  immediate  supervision 
of  the  work. 

Both  the  manufacturer  and  the  export  manager 
should  realize  that  the  worth-while  man  is  not  the 
peculiar  product  of  any  country  or  clime.  Race 
and  nationality  are  not  the  distinguishing  marks  of 
excellence.  The  good  and  the  bad  exist  everywhere 
in  about  the  same  proportions  and  commercial  sue- 


THE  EXPORT  MANAGER  39 

cess  attends  him  who  goes  into  world  markets  well 
equipped,  convinced  that  he  will  find  good  and,  while 
protecting  himself  from  the  bad,  can  utilize  even  it 
to  good  ends  The  American  exporter  is  blessed 
with  an  assignment  of  unusual  possibilities,  enabling 
him  as  it  does  to  carry  to  every  corner  of  the  world 
some  of  the  spirit  of  the  United  States  of  America. 


CHAPTER  VII 
THE  EXPOET  DEPARTMENT 

The  term  ** export  department"  is  loosely  applied 
to  the  salaried  export  manager  and  his  part  of  the 
manufacturer's  selling  organization,  to  separate 
companies  handling  one  or  more  lines  and  organized 
to  operate  independently  but  under  the  same  control 
as  the  parent  firm  or  firms  and  even  to  the  staffs 
maintained  by  selling  agents  representing  a  number 
of  products  and  controlled  only  by  the  terms  of  the 
agreement  with  each  client. 

Strictly  speaking  ''export  department"  refers 
only  to  the  personnel  wholly  or  partially  under  the 
direction  of  the  closely  associated  foreign  sales 
manager,  but,  for  our  purposes,  it  may  be  extended 
to  include  separate  comiDanies  organized  and  con- 
trolled by  the  manufacturers  whose  lines  are 
handled. 

There  is  some  divergence  of  thought  as  to  the 
advisability  of  associating  and  co-ordinating  foreign 
trade  efforts  with  the  activities  of  the  domestic  sales 
department  under  the  supervision  of  the  general 
sales  executive  or  of  organizing  separately  with  a 
full  personnel  under  an  executive  responsible  only  to 
the  general  management. 

These  differences  of  opinion  among  export  man- 
agers are  due  to  the  peculiarities  of  the  experience 

40 


THE  EXPORT  DEPARTMENT  41 

of  each.  The  possibilities  of  the  ''built-in"  export 
department,  to  use  the  phrase  of  Mr.  Walter  F. 
Wyman,  one  of  its  strongest  advocates,  vary  with 
the  caliber  and  disposition  of  those  on  whom  de- 
pends the  proper  handling  of  credits,  collections, 
shipping  and  other  routine  work.  If  these  men, 
trained  only  for  the  domestic  field,  have  not  the 
capacity  for  development,  they  may,  by  their  nar- 
rowness of  vision  and  lack  of  adaptability  so  seri- 
ously hamper  the  export  manager's  activities  that 
either  he  must  make  the  best  of  a  bad  situation 
while  building  up  a  sufficient  volume  of  business  to 
warrant  the  gradual  organization  of  his  own  staff 
of  helpers,  or  the  obstructionists  must  be  removed 
and  replaced  by  better  men,  on  the  initiative  of  the 
general  management. 

The  advantages  to  the  firm  of  the  built-in  export 
department  charged  only  with  its  fair  overhead  and 
working  in  harmony  with  the  domestic  organization, 
are  manifold.  The  best  foreign  trade  policies  and 
methods  are  usually  those  evolved  in  sales  work 
within  our  borders  and  adapted  to  the  conditions 
encountered  in  each  overseas  market.  The  export 
manager  who  is  closely  associated  with  a  general 
sales  executive  of  long  experience  with  the  line  is 
greatly  helped  by  the  advice  and  assistance  that  is 
thus  at  his  disposal.  Conversely,  the  work  done  in 
foreign  markets  often  develops  methods  and  ideas 
that  can  be  applied  in  home  merchandizing  with 
excellent  results. 

There  is  a  distinct  payroll  economy  in  combining 
the  domestic  and  foreign  selling  organizations  and 
the  broadening  experience  of  dealing  with  the  vary- 


42    AMERICAN  METHODS  IN  FOREIGN  TRADE 

ing  problems  of  world  trade  makes  every  employee 
worth  more  to  his  firm  and  to  himself. 

There  are  many  eases,  however,  in  which  a 
separate  department  seems  advisable.  Some  inland 
manufacturers  find  it  advantageous  to  locate  their 
foreign  sales  office  in  New  York.  The  successful 
exportation  of  many  products  involves  engineering 
or  other  problems  that  are  so  distinctive  abroad, 
that  only  by  the  maintenance  of  an  entirely  separate 
organization  can  the  best  results  be  secured. 

There  seems  to  be  a  mistaken  impression  among 
manufacturers  with  little  or  no  experience  in  over- 
seas trade  that,  in  order  to  build  up  a  foreign  busi- 
ness, it  is  necessary  to  create  and  maintain,  at  great 
initial  expense,  a  full-fledged  export  department 
with  its  complement  of  helpers.  Nothing  is  further 
from  the  truth.  Such  a  step  is,  as  a  matter  of  fact, 
inadvisable,  for,  in  foreign  as  well  as  in  domestic 
trade,  organizations,  to  be  sound,  must  as  a  rule  be 
developed  rather  than  put  together  like  a  picture 
puzzle. 

An  active,  intelligent,  suitably  equipped  young 
American  with  a  stenographic  helper,  is  enough  for 
a  beginning.  Select  him  carefully  with  the  char- 
acteristics of  the  ideal  export  manager  in  mind, 
provide  him  with  a  library  of  reference  works  and 
with  facilities  for  correspondence  translation 
and  securing  credit  and  other  information,  see  that 
he  gets  all  necessary  co-operation  from  the  sales, 
credit  and  shipping  departments  and  back  him  up 
with  a  conservative  appropriation  for  publicity, 
circularizing,  postage  and  incidentals.  If  you  pick 
the  right  man,  provide  him  with  these  helps  and 


THE  EXPORT  DEPARTMENT  43 

have  the  patience  to  stand  by  him  while  he  works 
out  his  salvation,  you  will  have  an  export  depart- 
ment before  you  realize  it. 

Bon't  expect  miracles.  If  you  are  making  a  good 
article  that  is  in  profitable  demand  at  home,  you 
can,  unless  the  circumstances  are  very  exceptional, 
look  forward  to  a  worth-while  foreign  trade.  But 
distances  are  long,  your  name  probably  means  little 
or  nothing  in  overseas  markets,  the  best  business 
men  abroad  are  at  least  as  conservative  as  they  are 
within  our  borders  and  there  are  the  invariable  un- 
foreseen obstacles  to  be  surmounted. 

If  you  started  your  own  business,  recall  your  first 
years  of  foundation-laying  work  and  remember  that 
your  export  manager  is  going  through  the  same 
character-testing  experience,  less  trying  perhaps, 
without  the  problems  of  production  with  which  you 
had  to  wrestle,  but  certainly  more  difficult  in  other 
respects. 


CHAPTER  Vin 
THE  EXPORT  SELLING  PLAN 

Regrettable  as  the  fact  may  be,  it  is  obviously 
impossible  to  outline  in  detail  a  practical  export 
selling  plan  for  all  manufacturers.  The  methods 
that  must  be  used  vary  greatly  with  the  nature  of 
the  line,  with  the  character  of  the  available  means 
of  distribution  in  foreign  markets  and  with  the  con- 
ditions under  which  each  line  of  goods  is  sold  and 
used  abroad. 

The  only  general  rule  that  can  be  applied  is  that 
the  plan  in  each  instance  should  be  an  adaptation 
of  the  domestic  system  of  selling.  Human  beings 
everywhere  are  much  alike  and  have  developed 
about  the  same  institutions.  Each  manufacturer 
should  start  out  with  the  intention  of  locating 
facilities  similar  in  function  to  those  employed  in 
domestic  selling  and  then  develop  a  plan  for  using 
them  in  much  the  same  way,  subject  to  slight  varia- 
tions in  surface  details.  He  must  not  allow  himself 
to  be  confused  or  misled  by  names.  A  credit  report- 
ing bureau  may  be  in  just  as  good  odor  under  an- 
other designation.  A  buying  firm  should  not,  be- 
cause it  is  labeled  "export  commission  house,"  be 
confused  with  a  selling  agency.  A  foreign  importer 
may  or  may  not  be  a  jobber.  The  name  is  not  im- 
portant. The  function  performed  is  the  only  thing 
to  be  considered. 

44 


THE  EXPORT  SELLING  PLAN  45 

'  At  this  point  the  manufacturer  should  be  warned 
that  this  is  not  intended  to  confirm  him  in  his  ad- 
herence to  preconceived  ideas  as  to  how  people  must 
do  business  with  him.  On  the  contrary,  what  is 
meant  is  that  the  export  selling  plan,  while  involving 
some  departure  from  such  ideas,  need  not  be  revolu- 
tionary in  principle.  The  maker  who  contemplates 
a  campaign  in  direct  exporting  should  not,  after 
vainly  trying  to  find  a  way  to  do  abroad  exactly 
what  he  is  doing  at  home,  become  discouraged  and 
wish  the  whole  thing  off  on  an  agent  or  commission 
house  just  for  that  reason  alone.  In  succeeding 
chapters,  it  will  be  shown  that  the  intelligent  and 
diligent  seeker  will  be  rewarded  by  the  discovery  of 
the  existence  of  the  very  materials  he  needs  for 
constructing  his  distributing  machine. 

The  selling  plans  that  are  the  backbone  of  the 
world-wide  trade  of  'Our  successful  exporting  manu- 
facturers, have  been,  in  one  sense,  gradual  develop- 
ments. Few  if  any  of  them  were  worked  out  in 
clearly  defined  detail  before  a  start  was  made.  They 
were  the  outcome  of  a  determination  to  find  out  the 
way  to  use  abroad  the  fundamental  methods  ac- 
cepted as  best  for  each  line  at  home.  No  instance 
comes  readily  to  mind  where  unusual  success  has 
resulted  from  discarding  American  selling  methods 
for  the  adoption  of  those  that  obtain  in  Europe. 
It  seems  to  be  essential  to  carry  into  foreign  mar- 
kets the  best  that  Americanism  stands  for  and  use 
it,  not  in  a  narrow  and  selfish  way,  but  with  the 
profound  conviction  that,  just  as  the  possession  and 
intelligent  exercise  of  American  business  ideals 
bring  a  certain  return  at  home,  they  cannot  fail  to 


46    AMERICAN  METHODS  IN  FOREIGN  TRADE 

be  recognized  by  human  beings  everywhere  as 
worthy  of  reward  and  emulation. 

For  the  manufacturer  of  highly  elaborated 
products  who  attempts  direct  exporting,  the  first 
diverging  paths  between  which  he  must  choose  are 
represented  by  the  exclusive  agency  plan  and  its 
general  merchandizing  alternative.  When  he 
reaches  this  point  it  is  far  better  for  him  to  do  some 
good  hard  thinking  about  his  home  experience 
rather  than  to  depend  entirely  on  the  advice  of 
others.  Unfortunately  there  are  at  large  a  great 
many  self-constituted  foreign  trade  advisers,  some 
of  them  honest  and  disinterested  and  others  self- 
seeking,  who  from  their  owm  narrow  experience  or 
deliberately  to  serve  their  o^\^l  ends,  advocate  one 
or  the  other  of  these  plans  or  even  the  abandonment 
of  the  idea  of  direct  exporting,  without  regard  to 
the  nature  of  the  line  or  the  manufacturer's  internal 
situation. 

When  such  outside  advice  is  considered,  too  much 
stress  cannot  be  laid  on  the  importance  of  ascer- 
taining the  nature  of  the  experience  or  known  facts 
on  which  it  is  based.  It  is  quite  remarkable  how 
often  a  manufacturer  who  makes,  let  us  say,  a  line 
of  hosiery  and  who,  if  he  were  contemplating  enter- 
ing the  Pacific  Slope  market  would  never  dream 
of  being  guided  by  a  man  who  had  sold  pianos  there, 
will  nevertheless  be  influenced  in  laying  out  an  ex- 
port campaign  by  a  typewriter  salesman  who  has 
traveled  South  America,  by  a  representative  of 
some  export  house  whose  chief  interest  is  keeping 
trade  in  the  hands  of  his  firm  or  by  a  wandering 
South  American  who,  at  a  tender  age  and  without 


THE  EXPORT  SELLING  PLAN  47 

any  business  experience  in  his  own  country,  came 
to  the  United  States  to  seek  the  fortune  that  was 
more  likely  to  be  found  in  his  own  door  yard. 

If  the  manufacturer  with  his  supposed  good  busi- 
ness sense  and  his  special  acquaintance  with  his  own 
line  of  goods  will  but  exercise  his  own  judgment 
after  reading  the  succeeding  chapters,  he  should 
have  little  difficulty  in  making  a  wise  decision.  Let 
him  first  determine  to  his  o^vn  satisfaction  whether 
or  not  his  product  is  one  that  in  the  home  market 
requires,  or  could  be  sold  to.  advantage  by,  exclusive 
agency  arrangements.  If  the  decision  is  affirmative, 
the  chances  are  that  this  plan  must  be  used  abroad 
to  attain  the  best  results.  If,  on  the  other  hand,  the 
manufactured  article  is  best  marketed  at  home 
through  a  policy  of  general  merchandizing,  some 
very  good  reasons  should  be  found  for  departing 
from  this  method. 

The  tendency  on  the  part  of  American  manu- 
facturers to  let  someone  else  do  their  thinking  in 
export  matters,  to  farm  out  the  foreign  field  as  a 
temporary  makeshift  or  to  await  the  fruition  of 
some  governmental  project  which  they  hope  will,  in 
some  undefinable  way,  open  up  for  them  an  easily 
traveled  road  to  overseas  success,  is  a  very  great 
obstacle  to  our  progress  in  world  trade.  If  they 
will  but  devote  to  the  task  of  finding  and  following 
their  own  way  the  zeal  and  determination  which 
characterized  their  early  efforts  to  establish  their 
home  trade,  more  will  be  accomplished  than  by  the 
success  of  any  or  all  of  the  schemes  that  ever  have 
or  ever  will  be  formulated  to  do  for  them  what  they 
not  only  should  but  must  do  for  themselves. 


CHAPTER  IX 
SELLING  THROUGH  EXCLUSIVE  AGENTS 

The  exclusive  agent  in  foreign  markets  is  an 
individual  or  firm  acting  to  all  intents  and  purposes 
as  a  factory  selling  branch  but  without  the  active 
participation  of  the  honie  office  in  either  the  finan- 
cing of  local  transactions  or  in  resulting  profits.  In 
all  other  respects  the  relationship  is  or  should  be 
much  the  same. 

Exclusive  agents  should  not  be  confused  with  ex- 
clusive dealers  who  are  discussed  in  the  next 
chapter.  The  agent  orders  and  resells,  carries  a 
stock  of  parts,  makes  repairs  and  adjustments,  joins 
^^ith  the  manufacturer  in  sales  promotion  w^ork  in 
the  territory — in  short  does  all  that  a  capable  man- 
ager of  a  factory  selling  branch  would  do  in  his 
place.  The  sole  difference  lies  in  the  fact  that  he 
finances  all  orders,  sells  for  his  ovm  account  and 
takes  all  of  the  profit. 

Only  in  exceptional  cases  are  bona  fide  American 
factory  branches  a  success  in  foreign  selling.  The 
reasons  are  not  hard  to  find.  The  manufacturer, 
being  quite  unknown  in  overseas  markets,  must 
struggle  for  recognition  not  only  of  the  quality  of 
his  goods,  but  also  of  his  own  standing,  which  must 
be  established  with  each  individual  buyer.  He  must 
carry  the  burden  of  financing  his  own  import  ship- 

48 


SELLING  THROUGH  EXCLUSIVE  AGENTS    49 

ments  and  the  extension  of  local  credits,  while 
operating  in  a  strange  country  and  relying  entirely 
on  salaried  executives  where  dependable  men  of 
ability  are  at  a  high  premium.  The  exclusive  agent, 
carrying  the  financial  burden  for  the  sake  of  profit, 
accomplishes,  if  carefully  selected  and  properly 
handled,  all  that  could  be  hoped  of  a  factory  branch 
besides  contributing  as  a  factor  of  great  value,  his 
own  established  standing  in  the  market  he  serves. 

The  appointment  of  exclusive  foreign  agents  or 
the  establishment  of  factory  branches  is  an  absolute 
requisite  for  products  whose  successful  sale  involves 
mechanical,  technical  and  scientific  knowledge  of 
them.  Lines  requiring  expert  demonstration,  highly 
developed  repair  facilities  or  skilled  attention  sub- 
sequent to  their  acquisition  by  the  user  may  be  sold 
in  a  limited  way  without  such  representation,  but 
dissatisfaction  on  the  part  of  buyers  who  have  no 
one  near  by  to  turn  to  for  help  in  case  of  difficulty 
often  makes  such  sales  a  positive  handicap  to  the 
development  of  the  territory  by  an  agent  when  one 
is  appointed. 

Some  of  the  American  lines  which  have  succeeded 
best  abroad  by  making  exclusive  agency  arrange- 
ments are  household  and  office  specialties,  agricul- 
tural machinery,  special  machinery,  automobiles, 
engines,  boilers,  motors,  etc. 

The  greatest  of  care  should  obviously  be  exercised 
in  appointing  exclusive  agents  abroad.  The  first 
considerations  are  their  standing  in  local  circles  and 
their  ability  to  cover  their  territory  effectively  and 
finance  the  expected  volume  of  trade.  The  largest 
houses  are  not  always  the  best.   The  man  who  has 


50    AMERICAN  METHODS  IN  FOREIGN  TRADE 

succeeded  sometimes  ceases  to  supply  the  driving 
power  wliicli  built  up  his  large  business.  The  most 
effective  agent  for  a  new  line,  all  other  conditions 
being  satisfactory,  is  not  the  firm  that  is  large  now, 
but  the  one  that  is  likely  to  be  very  large  five  or  ten 
years  from  now,  because  the  new  line,  in  proportion 
as  it  contributes  to  this  growth,  is  correspondingly 
benefited. 

Make  sure,  by  stipulations  as  to  volume  of  busi- 
ness to  be  attained  during  each  succeeding  year, 
that  your  prospective  agent  is  not  trying  to  "box" 
your  line  in  favor  of  another.  Do  not  make  the 
territory  larger  than  the  representative  can  prove 
his  ability  to  cover  or  finance.  Avoid  entering  into  a 
binding  contract  at  the  outset.  Try  to  inspire  a  feel- 
ing of  confidence  in  the  integrity  of  your  own  inten- 
tions which  will  make  the  agent  feel  that  if  he  makes 
good  under  a  tentative  informal  agreement,  designed 
to  afford  protection  against  difficulties  unforeseen  by 
either  of  you,  he  wdll  be  given  the  opportunity  to 
become  a  permanent  part  of  your  selling  or- 
ganization. 

Once  you  have  appointed  an  agent  on  an  experi- 
mental or  formal  contract  basis,  co-operate  with 
him  in  every  feasible  w^ay.  Do  not  accept  a  com- 
mission house  order  without  learning  its  destination 
so  that  the  proper  commission  may  be  credited  on 
everything  originating  in  his  territory.  Instruct 
him  diplomatically  in  the  sales  methods  that  you 
have  found  successful  at  home,  so  that  he  may  adapt 
them  to  local  conditions.  Consult  with  him  on  all 
matters  of  sales  promotion  in  his  territory. 
Originate  circular  matter  giving  his  name  and  ad- 


SELLING  THROUGH  EXCLUSIVE  AGENTS    51 

dress  as  local  agent  to  be  criticized  or  approved  by 
him,  printed  by  you  and  sent  out  either  by  him 
or  by  you  to  prospective  customers  whose  names 
have  been  previously  compiled  by  one  or  both  of 
you.  Give  him  a  little  the  best  of  it  in  your  adjust- 
ments rather  than  stand  out  for  the  strict  letter  of 
your  rights.  Only  by  proving  that  you  have  his 
personal  interests  at  heart  can  you  expect  to  build 
up  a  business  friendship  on  the  strength  of  which 
will  depend  to  a  large  degree  your  success  in  his 
part  of  the  foreign  field. 

Above  all  strive  to  impart  to  all  agents  every- 
where the  spirit  of  co-operation  for  the  benefit  of 
users  of  your  line.  Imbue  them  with  the  confidence 
in  your  product  which  permeates  your  domestic 
organization  and  which  has  to  no  small  extent  con- 
tributed to  your  success, 


CHAPTER  X 

GENERAL  MERCHANDIZING  IN  FOREIGN 
MARKETS 

However  complex  its  manufacturing  process,  a 
product  which,  when  complete,  is  a  simple  one  which 
men,  Avomen  and  children  everjAvhere  know  how  to 
use  instinctively  or  because  of  long  familiarity  with 
it  should  as  a  rule  be  sold  abroad  either  to  all  im- 
porting jobbers  who  can  handle  it  or  to  every  re- 
tailer who  has  facilities  for  importation.  Such  a 
line  does  not  require  exclusive  representation  as 
described  in  the  preceding  chapter. 

It  is  quite  true  that  makers  of  some  articles  of 
this  kind  which  are  sold  in  the  United  States  by  the 
exclusive  dealer  method  have  found  the  same  sys- 
tem of  distribution  to  be  advantageous  in  foreign 
countries.  The  best  example  of  this  is  the  case  of 
trade-marked  lines  of  American  shoes,  in  market- 
ing which,  at  home  and  abroad,  many  of  our  largest 
manufacturers  have  found  it  good  business  to  con- 
fine their  dealings  to  one  merchant  in  each  town, 
city  or  city  district,  rather  than  make  it  difficult 
for  any  one  dealer  to  carry  a  complete  stock,  by 
scattering  the  profit  among  a  number  of  retailers. 
The  exclusive  dealer  or,  more  accurately,  the  ex- 
clusive retailer  plan,  works  well  abroad  for  lines 
that  find  it  beneficial  at  home  and  all  makers  of 

52 


GENERAL  MERCHANDIZING  63 

general  mercliandize  will  do  well  to  carry  into  the 
foreign  field  their  practice  of  not  selling  to  the  small 
store  across  the  street  from  the  established  dealer 
who  has  built  up  a  neighborhood  demand  for  their 
goods. 

General  merchandizing  through  foreign  dealers 
is  much  the  same  as  in  the  domestic  market.  There 
are  some  differences,  due  to  the  greater  distances 
between  factory  and  merchant,  to  ocean  transporta- 
tion, to  local  conditions  and  to  variations  in  lan- 
guages, customs  and  seasonal  demand. 

Owing  to  the  manifest  impossibility  of  replacing 
merchandize  quickly,  the  foreign  dealer  must  carry 
a  large  stock  and,  his  turnover  being  less  frequent 
than  that  of  a  domestic  merchant  doing  the  same 
volume  of  business,  his  margin  of  profit  must  be 
greater  and  his  average  stock  order  larger.  These 
facts  must  be  kept  in  mind  by  the  manufacturer 
in  calculating  his  probable  selling  cost,  passing  on 
credits  and  considering  other  questions  concerning 
his  relations  with  his  retailing  partners  beyond  our 
frontiers,  for  it  is  only  by  intimate  familiarity  with 
the  conditions  under  which  the  distributor  is  work- 
ing, that  the  most  effective  co-operation  can  be 
extended. 

The  variations  in  procedure  due  to  ocean  trans- 
portation are  not  difficult  for  any  good  shipping 
department  to  master.  Adequate  facilities  are  in 
existence.  Select  a  good  freight  forwarding  house 
and  consult  with  it.  The  question  of  packing  for 
ocean  shipment  and  to  meet  local  conditions  has 
never  troubled  a  manufacturer  who  was  really  in 
earnest  about  foreign  trade.     The  subject  may  be 


54    AMERICAN  METHODS  IN  FOREIGN  TRADE 

dismissed  with  the  emphatic  reminder  that  the 
foreign  buyer  must  get  what  he  wants  in  this  re- 
spect. His  demands  are  based  on  conditions  in  his 
market  and  only  by  a  recognition  of  this  fact  can 
the  manufacturer  hope  to  build  up  a  large  foreign 
trade. 

The  foreign  language  question  is  not  a  serious 
one,  for  the  work  done  by  our  pioneer  exporters 
has  resulted  in  the  upbuilding  of  facilities  for 
corresponding,  circularizing  and  cataloging  in  any 
commercial  tongue.  Every  manufacturer  should 
use  these  facilities  in  preference  to  having  this  work 
done  in  his  own  office  or  home  city  by  an  itinerant 
translator  over  whom  no  adequate  supervision  can 
be  exercised. 

There  is,  strictly  speaking,  no  such  thing  as  sea- 
sonal demand  in  export  trade.  It  is  true  that  re- 
tailers of  some  products  or  all  merchants  in  some 
one  country  order  at  a  particular  time  of  the  year 
more  heavily  than  at  others,  but  there  is  no  fixed 
rule  regarding  this.  Seasonal  lines  in  the  volume 
of  trade  are  obliterated  by  the  large  but  varying 
degree  of  prevision  which  foreign  buyers  exercise 
in  order  to  make  sure  of  an  adequate  stock  at  all 
times. 

Co-operation  in  developing  a  consumer  demand 
should  be  carried  beyond  the  limits  that  obtain  in 
domestic  work  of  this  kind.  The  foreign  merchant, 
as  a  rule,  lacks  that  general  familiarity  mth  sales 
promotion  methods  that  is  one  of  the  chief  assets 
of  our  domestic  retailer.  He  must  not  only  be 
helped  by  definite  suggestions,  but  instructed  in 
possible  ways  of  carrying  them  out.     This  educa- 


GENERAL  MERCHANDIZING  65 

tional  work  is  one  of  the  things  which  distinguishes 
the  campaigns  of  American  makers  from  those  con- 
ducted by  competitors  of  other  countries.  Wherever 
our  progressive  exporting  manufacturers  have  gone 
they  have  strengthened  and  established  existing 
merchandizing  organizations  and  developed  new 
ones.  This  highly  constructive  consideration  for 
the  independence  and  general  welfare  of  the  mer- 
chant is  one  of  the  factors  that  has  enabled  our 
exporters  to  disregard  price  competition  and  made 
them,  many  years  before  the  great  War  began,  the 
bugbears  of  European  trade  scouts. 


CHAPTER  XI 
DETERMINATION  OF  EXPORT  PRICES 

Having  decided  to  his  own  satisfaction  whether 
he  should  adopt  the  exclusive  agency  or  the  general 
merchandizing  plan,  one  of  the  first  things  that  the 
manufacturer  must  do  is  to  determine  what  his  ex- 
port prices  should  be.  It  is  impossible  to  formulate 
any  fixed  method  for  doing  this,  but  some  general 
suggestions  that  should  prove  helpful  can  be  made. 

Where  the  exclusive  agency  plan  is  adopted,  all 
dealings  will,  eventually  at  least,  be  confined  to 
agents.  The  best  practice  in  such  cases  has  hereto- 
fore been  to  quote  F.O.B.  New  York  or  other  United 
States  port,  a  price  covering  cost,  export  selling 
expense  (including  advertising  and  other  co-opera- 
tion extended  to  agents)  and  profit.  Such  quota- 
tions are  usually  made  in  the  form  of  a  schedule 
of  list  prices  to  which  apply  discounts  theoretically 
covering  the  profit  of  the  agent  and  his  sub-agents, 
with  a  final  discount  for  cash. 

Some  experienced  exporters,  having  built  up  an 
established  business  and  having  agents  every^vhere 
to  whom  prospective  customers  can  be  referred  to 
advantage,  have  discarded  the  cumbersome  list  and 
discount  method  of  quoting,  in  favor  of  confidential 
net  prices  supplied  only  to  such  agents.  Where  a 
sale  in  a  territory  not  covered  by  an  agency  is  but 

56 


DETERMINATION  OF  EXPORT  PRICES       57 

a  remote  possibility  and  can  be  handled  as  an  ex- 
ception, this  has  its  advantages  but  it  is  scarcely 
to  be  recommended  to  the  beginner  for  whom  the 
securing  of  a  few  direct  orders  at  a  list  price  less 
the  first  discount,  but  not  the  second  which  repre- 
sents the  prospective  agents'  profits,  may  be  the 
means  of  securing  representation  which  it  might  be 
difficult  to  obtain  without  such  previous  demonstra- 
tion of  the  salability  of  the  product. 

Similarly  a  schedule  of  list  prices  with  discounts 
representing  wholesale  and  retail  dealers'  profits 
with  a  final  discount  for  cash  are  usually  worked 
out  for  lines  to  be  sold  by  the  general  merchandiz- 
ing plan. 

In  calculating  export  prices  the  manufacturer 
should  anticipate  that  the  selling  cost  will,  under 
exclusive  agency  arrangements,  average  from  20% 
to  35%  more  than  it  does  when  the  same  method  is 
used  at  home.  Under  the  general  merchandizing  plan 
the  increase  in  selling  cost  will  be  slightly  less,  prob- 
ably averaging  from  107o  to  25%  more  than  in  the 
domestic  market.  This,  combined  with  the  fact  that, 
as  previously  explained,  the  local  distributor  abroad 
must  have  a  wider  margin  of  profit  than  is  cus- 
tomary in  the  United  States,  makes  it  advisable  that 
all  list  prices  for  export  should  range  somewhat 
higher  than  in  domestic  selling. 

It  is  probable  that,  unless  the  manufacturer  is 
fortunate  enough  to  secure  previously  the  services 
of  an  export  manager  with  experience  in  his  line, 
the  range  of  prices  established  at  the  beginning  will 
later  require  some  revision  up  or  down.  This  is 
not  a  difficult  matter,  for  if  the  various  factors  have 


58    AMERICAN  METHODS  IN  FOREIGN  TRADE 

been  analyzed  and  given  careful  consideration  by  a 
prudent  man,  the  revision  will  usually  be  downward. 
It  is  obviously  better  to  start  with  prices  a  little 
too  high  rather  than  a  little  too  low  as,  if  selling 
methods  are  sound,  this  will  have  no  retarding  in- 
jfluence  in  the  beginning  and  the  subsequent  lowering 
of  prices  to  old  customers  can  only  result  in  benefit 
if  it  is  done  diplomatically. 

In  determining  what  your  export  prices  are  to  be, 
do  not  attempt  to  find  out  what  similar  goods  are 
selling  for  and  then  try  to  meet  these  figures.  You 
know  or  should  know  your  costs.  Allow  yourself 
a  fair  profit  and  go  out  and  fight  for  recognition 
like  the  good  American  business  man  that  you  are. 
If  your  prices  are  higher  than  your  European  com- 
petitor's, remember  that  it  is  human  nature  to  at- 
tribute superior  quality  to  the  article  which  com- 
mands a  higher  price.  Remember  too  that  the  per- 
centage representing  the  difference  in  net  cost 
F.O.B.  port  of  origin  between  two  similar  articles, 
figures  less  to  the  overseas  user  who  must  pay  for 
either  a  price  tvhicJi  includes  this  cost  plus  the  same 
transportation  charges,  the  same  selling  expense 
and  in  many  cases  the  same  import  duty. 

There  is  a  distinct  trend  toward  the  extension 
of  the  practice  of  quoting  export  prices  C.I.F.,  that 
is,  covering  Cost,  Insurance  and  Freight,  or  C.I.F.C, 
covering  these  items  and  Consular  fees,  thus  giving 
the  foreign  importer  an  exact  idea  of  the  cost  of 
the  goods  delivered  at  his  port  of  entry.  These 
prices  are  quoted  subject  to  variations  in  insurance 
and  freight  rates,  and  deliveries  are  only  guaran- 
teed under  carefully  prescribed  conditions  designed 


DETERMINATION  OF  EXPORT  PRICES       59 

to  protect  the  exporter.  Where  such  quotations  can 
safely  be  made,  it  is  very  helpful  to  the  foreign 
buyer  especially  in  negotiations  with  new  sources 
of  supply,  and  it  is  to  be  hoped  that  the  marine 
insurance  and  transportation  companies  will  in  the 
future  facilitate  in  every  possible  way  the  attempts 
of  our  manufacturers  to  quote  delivered  prices  to 
their  overseas  customers. 

Those  who  in  their  domestic  selling  operations 
attempt  to  fix  the  prices  at  which  their  goods  should 
retail  will  find  it  practically  impossible  to  carry 
this  policy  into  foreign  markets,  though  in  some 
cases  it  can  later  be  worked  out  to  a  limited  extent 
by  co-operation  with  exclusive  agents.  Price  main- 
tenance is  a  difficult  matter  in  countries  where  the 
local  currency  is  not  on  a  gold  basis  and  is  conse- 
quently subject  to  wide  fluctuations  or  where  the 
primitive  state  of  transportation  sometimes  makes 
the  cost  of  an  article  to  a  dealer  in  mountain  regions 
double  what  his  compatriot  in  a  coast  town  pays  for 
it.  Plan  to  get  your  price  F.O.B.  United  States  port 
or  C.I.F.  and  leave  to  agents  and  dealers  the  prob- 
lem of  fixing  exact  retail  prices. 

Generally  speaking  it  is  not  good  business  to  sell 
anywhere  except  at  a  fair  profit.  As  repeatedly 
stated  in  previous  chapters  our  success  in  exporting 
most  lines  of  manufactured  goods  does  not  depend 
on  meeting  price  competition  but  rather  on  the 
quality  of  our  products  and  the  co-operation  ex- 
tended to  distributors  based  on  a  sympathetic  ap- 
preciation of  the  circumstances  under  which  they 
are  working. 


CHAPTER  XII 
MAKING  A  START  IN  DIRECT  EXPORTING 

The  high  development  of  direct  relations  between 
exporting  manufacturers  and  their  foreign  cus- 
tomers and  the  consequent  bridging  of  the  gap 
between  producer  and  consumer  is  but  a  logical  ex- 
tension of  the  tendency  to  eliminate  unnecessary 
middlemen  in  our  national  distribution.  It  is  not 
so  much  a  question  of  the  money  saving  involved, 
for  sometimes  no  saving  results.  The  improved 
service  rendered  and  the  good  will  built  up  by  our 
manufacturers  who  take  off  their  coats  and  work 
with  and  for  their  distributors  and  consumers,  have 
been  powerful  factors  in  our  fight  for  a  share  of  the 
trade  of  all  foreign  markets. 

For  Europe  still  clings  and,  from  all  signs  now 
visible,  will  continue  to  cling,  to  the  methods  of  our 
forefathers.  In  all  the  manufacturing  countries  of 
the  Old  World,  the  producers  do  not  know  very  much 
about  selling  their  own  products  and  care  altogether 
too  little  about  what  becomes  of  them  or  what 
service  they  give,  after  they  are  sold.  They  are 
inclined  to  content  themselves  with  solving  the  ad- 
mittedly serious  problems  of  production,  leaving  the 
equally  important  work  of  selling  to  agents  and 
jobbers   who    are   much   interested   in   their   own 

60 


MAKING  A  START  IN  DIRECT  EXPORTING    61 

profits,  but  concern  themselves  but  little  with  the 
future  of  the  producers  of  the  goods  they  handle. 
Yet  we  are  urged  to  forgo  this,  our  great  competi- 
tive advantage,  by  nationalizing  our  foreign  trade, 
and  merging  our  great  selling  organizations  into  ex- 
port jobbing  combinations  to  the  complete  oblitera- 
tion of  individual  prestige  and  distinctive  sales- 
manship ! 

The  manufacturer  who  decides  to  do  a  direct  ex- 
port business  on  the  exclusive  agency  plan,  having 
fixed  a  tentative  schedule  of  prices,  must  next  take 
steps  to  find  and  appoint  his  agents.  This  may  be 
done  by  sending  a  representative  to  make  a  personal 
investigation,  by  circularizing  a  selected  list  of  pos- 
sible representatives  or  by  advertising  either  in  an 
export  publication  or  in  local  media  in  each  territory. 
Probably  a  combination  of  at  least  two  and  perhaps 
all  of  these  methods  gives  the  most  satisfactory 
results. 

There  is  nothing  to  be  said  against  the  effective- 
ness of  the  personal  visit.  Probably  by  no  other 
means  can  the  manufacturer  so  quickly  pass  on  the 
qualifications  of  a  prospective  foreign  agent.  Yet 
the  task  of  a  man,  however  competent,  sent,  for 
example,  to  Buenos  Aires,  to  find  and  open  negotia- 
tions with  the  best  possible  firm  or  individual  to 
represent  an  unknown  house  with  an  unknown  line, 
is  a  difficult  assignment.  Many  American  manufac- 
turers have  dispatched  such  emissaries  only  to  dis- 
cover, much  to  their  surprise,  that  their  excellent 
home  reputation  had  not  preceded  them  into  the 
foreign  field  and  that  much  more  satisfactory  re- 
sults would  have  been  secured  had  some  preliminary 


62    AMERICAN  METHODS  IN  FOREIGN  TRADE 

or  simultaneous  circularizing  or  advertising  been 
done. 

Many  makers  have  secured  suitable  foreign 
agents  through  correspondence  originated  by  a  com- 
bination of  skillful  circularizing  and  advertising. 
This  process  may  be  slower,  but  by  virtue  of  the 
large  number  of  prospects  covered,  it  frequently 
reveals  possibilities  of  highly  advantageous  connec- 
tions vp^ith  firms  whose  interest  in  the  product  would 
not  have  been  discovered  by  a  personal  representa- 
tive of  the  manufacturer.  Foreign  importers  often 
take  on  with  great  success  lines  totally  unrelated  to 
their  previous  activities.  The  task  of  uncovering 
such  prospective  sales  agents  by  a  personal  canvass 
of  the  field  is  not  an  easy  one. 

In  making  a  start  in  general  merchandizing  ex- 
actly the  same  methods  may  be  used.  Here  the 
immediate  objective  is  of  course  the  securing  of 
initial  orders  from  established  merchants  instead  of 
the  making  of  agency  arrangements  and  even  more 
emphasis  should  therefore  be  laid  on  the  importance 
of  preliminary  circularizing  and  advertising.  To 
approximate  the  highest  possible  volume  of  trade 
in  any  territory,  personal  work  either  on  dealers 
or  through  agents  is  without  doubt  an  essential,  but 
many  ill-considered  journeys  through  foreign  mar- 
kets have  been  made  by  salesmen  who,  unsupported 
by  previous  preparatory  work,  have  found  them- 
selves obliged  to  forget  their  original  intention  of 
making  their  trips  profitable,  devoting  their  efforts 
instead  to  the  missionary  work  that  might  well  have 
been  done  from  the  home  office.  Such  changes 
in  plan  have  frequently  proved  profitable  in  the  long 


MAKING  A  START  IN  DIRECT  EXPORTING    63 

run,  but  that  much  discouragement  and  loss  of  time 
might  in  these  cases  have  been  avoided  by  a  more 
intelligent  use  of  all  the  modern  means  of  sales  pro- 
motion, is  not  to  be  doubted. 

There  are  many  instances  of  exceptional  success 
in  general  merchandizing  campaigns  where  no  one 
has  ever  been  sent  abroad  to  represent  the  manu- 
facturing firms.  Intelligent  and  persistent  adver- 
tising and  circularizing  with  careful  attention  to  re- 
sulting correspondence  in  time  developed  demand  in 
many  countries  to  a  point  where  the  lines  became 
attractive  to  local  selling  agents  who  now  act  as 
resident  salesmen  for  them.  Such  representatives, 
who  sell  on  commission  for  the  manufacturer's  ac- 
count, should  not  be  confused  with  the  exclusive 
agents  whose  function  is  discussed  in  Chapter  IX, 
for  their  work  is  strictly  analogous  to  that  done  by 
traveling  salesmen  in  this  country.  The  employ- 
ment of  this  means  of  building  up  a  foreign  trade 
will  be  more  thoroughly  discussed  in  Chapter  XVI. 

There  is  nothing  difficult  or  mysterious  about 
making  a  start  in  direct  exporting,  which,  as  the 
term  implies,  means  the  maintenance  of  direct  re- 
lations with  foreign  buyers,  be  they  exclusive  agents 
or  dealers.  This  does  not  by  any  means  signify 
that  orders  may  not  be  handled  through  export 
houses.  The  employment  of  these  facilities  as  buy- 
ing and  shipping  representatives  depends  largely  on 
the  volition  of  the  foreign  importer  who  may  or  may 
not  prefer  to  do  business  through  them.  In  no  case 
should  the  manufacturer  attempt  to  stipulate 
through  whom  purchases  shall  be  made.  He  has  a 
right  to  ask  for  his  price,  regulate  terms  and  assure 


64    AMERICAN  METHODS  IN  FOREIGN   TRADE 

himself  as  to  the  credit  risk,  but  beyond  this  point 
he  is  in  the  hands  of  his  overseas  distributors  with 
whom  it  is  his  privilege  and  duty  to  co-operate,  but 
to  whom  he  cannot  dictate. 


CHAPTER  XIII 

CIRCULAEIZING  BY  THE  BEGINNER  IN 
DIRECT  EXPORTING 

CiRCULAEiziNG  and  advertising  play  mncli  the  same 
parts  in  foreign  as  in  domestic  trade.  Properly- 
employed  they  are  an  invaluable  means  of  making 
agency  or  dealer  connections  and  later  on  of  co- 
operating with  such  distributors  in  the  building  up 
of  a  consumer  or  user  demand. 

The  most  suitable  circular  for  the  introductory 
work  of  originating  correspondence  with  prospective 
agents  or  dealers  is  a  simple  but  attractive  presenta- 
tion of  the  most  novel  or  popular  articles  of  the  line, 
with  incidental  mention  of  the  rest  or  some  in- 
dication of  the  standing  of  the  maker  and  of  the 
scope  and  character  of  the  production  facilities  back 
of  the  goods.  Bombastic  over-statements  should  be 
avoided.  Say  what  you  have  to  say,  simply  and 
frankly. 

This  circular  should  be  enclosed  with  a  letter 
which  places  most  of  its  emphasis  on  the  service  and 
co-operation  the  manufacturer  plans  to  extend  to  all 
who  handle  his  line.  There  is  some  difference  of 
opinion  regarding  the  efficacy  of  form  letters  for 
this  purpose,  but  those  who  oppose  them  seem  in 
the  past  to  have  depended  for  success  on  their 
deceptive  possibilities  rather  than  upon  the  char- 

65 


66    AMERICAN  METHODS  IN  FOREIGN  TRADE 

acter  of  their  contents.  Their  indisputable  effective- 
ness is  seldom  if  ever  due  to  their  delusive  qualities, 
but  to  the  fact  that  they  are  interesting  to  the  man 
who  gets  them.  Printed  forms  masquerading  as  per- 
sonal, individual  communications  have  seldom  mis- 
led intelligent  business  men.  When  they  read  them, 
they  do  so  because  the  message  conveyed  comes  to 
them  in  a  familiar  and  easily  comprehended  guise. 
Men  are  creatures  of  habit.  They  seldom  discard  a 
letter  of  any  kind  without  a  glance,  for  fear  it  may 
be  worth  reading.  Having  looked  at  a  form  letter 
they  may  read  it,  not  as  a  rule  because  they  are 
tricked  into  so  doing,  but  because  it  seems  to  them 
to  deserve  attention. 

If  prices  are  mentioned  in  export  circulars,  they 
should  be  list,  reserving  the  quotation  of  discounts 
for  ensuing  correspondence.  Many  export  man- 
agers refrain  from  any  mention  of  them,  list  or 
net,  in  their  circulars  or  other  forms  of  general 
advertising,  devoting  their  first  efforts  exclusively 
to  arousing  interest  in  the  line.  Most  salesmen  will 
agree  that  in  selling  quality  goods  price  should  be 
the  last  thing  discussed. 

Some  of  the  more  conservative  foreign  sales 
managers  are  opposed  to  the  general  circularizing 
of  prospects  for  exclusive  agencies  on  the  ground 
that  what  the  manufacturer  has  to  offer  is  thereby 
cheapened  in  the  eyes  of  the  importing  houses  thus 
addressed.  The  validity  of  this  objection  would 
seem  to  depend  largely  on  the  form  of  approach 
employed.  No  business  man  would  argue  the  ad- 
visability of  suddenly  deluging  a  list  of  foreign 
firms  with  a  definite  offer  of  an  exclusive  agency 


CIRCULARIZING  BY  THE  BEGINNER        67 

arrangement,  but  there  can  be  no  real  objection  to 
the  use  of  a  general  circular  presenting  the  attrac- 
tive features  of  a  line  in  such  a  way  as  to  suggest 
to  all  readers  the  desirability  of  representing  it 
locally.  And  there  seems  to  be  no  reason  why  in- 
cidental mention  that  agency  applications  will  be 
considered  cannot  be  made  in  such  a  circular.  The 
best  representative  for  a  given  line  in  any  foreign 
market  is  often  a  very  small  needle  in  a  very  large 
haystack  and  it  is  difficult  to  understand  how  all 
the  possibilities  can  be  uncovered  except  by  blanket- 
ing the  field  in  a  preliminary  way. 

The  direct  exporter  should,  in  the  beginning  at 
least,  circularize  commission  houses,  many  of  which 
as  resident  buying  agents  for  foreign  firms  are  on 
the  alert  for  new  lines  in  behalf  of  their  overseas 
clients.  Where  the  general  merchandizing  plan  is 
used,  such  circularizing  should  be  kept  up  as  long 
as  there  is  a  chance  that  the  percentage  of  returns 
in  the  form  of  new  foreign  connections  and  the 
strengthening  of  old  ones,  will  make  the  investment 
a  profitable  one.  On  the  other  hand,  lines  that  are 
to  be  sold  by  the  exclusive  agency  method  need  not 
perhaps  be  kept  so  continuously  before  these  factors 
after  fairly  adequate  foreign  representation  has 
been  secured. 

In  approaching  export  commission  houses,  the 
same  printed  circular  matter  that  is  sent  abroad 
may  be  used,  but  it  should  be  accompanied  by  a 
special  letter  stating  just  what  work  is  being  done 
direct  in  foreign  markets  so  that  these  buying 
agents  may  be  prepared  for  any  interest  later  mani- 
fested by  their  clients  and  may,  if  they  care  to,  take 


68    AMERICAN  METHODS  IN  FOREIGN  TRADE 

the  initiative  by  making  an  intelligent  presentation 
of  the  matter  to  those  they  serve. 

The  attitude  of  the  prospective  direct  exporter 
toward  export  commission  houses  should  be  de- 
termined by  the  constant  realization  that  they  are 
the  more  or  less  trusted  buying  representatives  of 
many  worth-while  foreign  firms  and,  as  such,  have 
influence  with  them.  As  previously  pointed  out,  the 
entirely  fair  attiude  is  that  of  willingness  to  meet 
the  wishes  of  overseas  buyers  as  to  how  transactions 
are  to  be  handled. 

Direct  mail  work  should  play  an  important  part 
in  the  campaign  for  foreign  business.  Many  of  our 
most  successful  exporting  manufacturers  owe  their 
start  to  intelligent  and  thorough  circularizing  com- 
bined with  the  judicious  use  of  space  in  export  pub- 
lications. Sometimes  such  beginnings  were  later 
expanded  by  the  efforts  of  representatives  on  the 
ground,  but  there  are  noteworthy  instances  where 
gradually  and  at  little  expense,  all  of  the  markets 
of  the  world  have  been  developed  chiefly,  if  not  en- 
tirely, by  persistent  and  painstaking  circularizing 
and  advertising  supplemented  by  careful  attention 
to  resulting  inquiries.  It  is  true  that  no  quick  "kill- 
ings" can  thus  be  made,  but  under  normal  condi- 
tions overseas  countries  are  not  gold  mines  where 
rich  strikes  are  to  be  expected,  but  rather  fields  of 
great  productive  power  for  those  who  know  how, 
patiently  and  thoroughly,  to  sow  the  seed  and  cul' 
tivate  and  gather  the  ever-ripening  harvest. 

Again  it  should  be  stated  that  the  value  of  per- 
sonal representation  is  unquestioned,  but  it  must 
always  yield  precedence   in   importance,   first,   to 


CIRCULARIZING  BY  THE  BEGINNER        69 

soundness  of  policy  and  second,  to  the  ability  with 
which  that  policy  is  carried  out  in  the  home  office. 
Manufacturers  often  expect  to  accomplish  too  much 
hy  merely  sending  salesmen  abroad  with  catalogs 
and  samples,  forgetting  that  what  the  foreign  buyer 
wants  is  not  merely  good  merchandise  at  fair  prices, 
but  permanent  and  reliable  sources  of  supply  for 
such  goods. 


CHAPTER  XIV 

EXPORT  PUBLICATIONS  AND  THE  BE- 
GINNER IN  DIRECT  EXPORTING 

Theee  are  two  kinds  of  journals  published  in 
the  United  States  for  foreign  distribution.  The 
largest  class  comprises  those  of  general  circulation 
among  wholesale  importers,  companies  engaged  in 
mining,  the  operation  of  public  utilities  and  the 
management  of  large  private  enterprises,  the 
more  important  retailers — in  short,  among  all  those 
who  do  business  in  foreign  markets  on  a  sufficiently 
large  scale  to  make  it  profitable  for  them  to  import 
either  for  resale  or  for  their  own  needs. 

The  second  class  consists  of  publications  each  of 
which  is  designed  to  interest  a  certain  class  of 
readers,  such  as  planters,  druggists,  shoe  retailers, 
automobile  dealers,  etc.,  more  or  less  .without  regard 
to  their  direct  buying  power,  but  rather  with  the 
idea  of  influencing  through  them  the  purchases 
made  by  importing  distributors. 

Each  of  these  has  its  sphere  of  usefulness,  but 
unless  the  line  to  be  sold  is  one  whose  unit  is  large 
enough  to  make  single  initial  sales  worth  while,  the 
general  export  publication  is  best  for  the  beginner 
who  is  looking  for  exclusive  agents,  dealer  connec- 
tions or  initial  orders  from  users  whose  needs  are 
sufficiently  large  to  warrant  direct  buying. 

70 


EXPORT  PUBLICATIONS  71 

At  first  glance  it  might  seem  to  the  uninitiated 
that  the  use  of  a  publication  purporting  to  reach 
only  those  who  are  known  to  be  interested  in  his 
line  would  involve  less  waste  in  circulation  and  give 
quicker  results.  Many  have  been  led  astray  by  this 
assumption. 

Generally  speaking,  the  foreign  firm  whose  ac- 
tivity in  any  one  branch  of  trade  is  sufficient  to 
attract  the  attention  of  an  American  publisher  of 
a  paper  devoted  to  that  line  alone,  is  not  a  good 
prospect  for  makers  of  those  goods  who  are  trying 
to  get  a  foothold  in  overseas  markets.  The  very  ac- 
tivity which  the  publisher  notes  is  a  sure  indication 
that  such  a  foreign  firm  has  made  connections  with 
satisfactory  sources  of  supply  in  this  or  other  coun- 
tries and  having  identified  itself  with  the  goods 
produced  by  certain  makers,  will  not,  under  normal 
conditions,  be  quick  to  make  a  change. 

In  most  foreign  markets  the  best  prospective  im- 
porters of  any  one  line  are,  for  the  beginner,  those 
firms  which  have  connections  with  makers  of  that 
line  so  unsatisfactory  as  to  prevent  them  from  at- 
tracting much  notice;  those  which,  having  handled 
allied  products  successfully,  are  ready  to  be  shown 
how  they  can  extend;  or  those  which,  never  having 
handled  the  line  in  question,  but  interested  in  it  by 
noting  the  success  of  others,  are  inclined  to  devote 
some  of  their  capital  and  energy  to  it  when  an  at- 
tractive opportunity  comes  along.  Only  the  general 
publication,  which  blankets  the  field,  can  claim  to  sift 
such  prospective  buyers  from  the  scores  of  thou- 
sands of  importers  of  manufactured  goods. 

The  circulation  of  every  important  general  ex- 


72    AMERICAN  METHODS  IN  FOREIGN  TRADE 

port  publication  is  practically  all  free.  A  paper,  no 
matter  how  excellent,  no  matter  how  valuable  from 
the  reader's  point  of  view,  must  be  sold  like  any 
other  manufactured  article.  The  difficulty  of  con- 
ducting at  very  long  range  a  campaign  for  paid 
circulation  and  of  collecting  the  small  amounts  due 
for  each  subscription  and  the  renewal  thereof,  com- 
bined with  the  recognition  of  the  importance  to  the 
advertiser  of  many  foreign  importing  firms  who 
might  never  take  the  trouble  to  subscribe,  forced  on 
the  first  publishers  in  this  field  a  certain  amount  of 
free  distribution  and  gradually  made  it  apparent 
that  what  is  now  called  ''directed  circulation"  was 
the  only  practical  plan  of  operation.  By  this  method 
the  copies  over  and  above  those  required  to  serve 
the  small  percentage  of  paid  subscribers  are  sent 
free  to  carefully  selected  names  of  foreign  buyers 
with  a  frequency  that  varies  with  the  relative  im- 
portance of  each.  In  this  way  hundreds  of  thou- 
sands of  firms  are  reached  each  year. 

Some  advertisers  trained  to  regard  paid  circula- 
tion as  a  sine  qua  non  of  publication  publicity 
profess  on  this  account  to  disbelieve  in  the  efficacy 
of  export  papers.  There  would  be  more  point  to 
this,  if  it  were  possible  for  them  to  buy  a  paid  cir- 
culation among  foreign  buyers  generally.  This  they 
cannot  do  and  it  must  be  admitted  that  any  adver- 
tising is  good  which  reaches  and  interests  enough 
of  the  right  people.  That  export  publications  do 
this  there  can  be  no  dispute. 

American  manufacturers  seeking  foreign  trade 
need  so  much  in  addition  to  publicity  that  export 
publishers  have  found  it  necessary  to  maintain  for 


EXPORT  PUBLICATIONS  73 

their  advertisers  a  supplementary  service  in  the 
translation  of  correspondence,  supplying  lists  of 
names  for  circularizing  purposes,  reporting  on  the 
standing  of  foreign  firms  and  helping  to  solve 
special  problems  as  they  arise.  This  service  has 
been  so  highly  developed  that  it  has  come  to  be 
considered  one  of  the  most  valuable  facilities  at  the 
disposal  of  the  seeker  of  overseas  trade. 

Too  much  should  not  be  expected  of  export  pub- 
lications. They  give  the  best  results  only  to  those 
who  know  what  they  are  trying  to  do  and  who  sup- 
plement the  publicity  their  columns  afford  by  cir- 
cularizing and  by  careful  attention  to  detail  in 
handling  inquiries.  A  combination  of  circularizing 
and  the  use  of  representative  space  in  at  least  one 
and  preferably  two  export  journals  is  very 
likely  to  get  the  attention  of  the  right  men  at  the 
right  time  and  usually  constitutes  a  sound  campaign 
for  the  beginner. 

The  reputations  of  export  papers  have  in  the  past 
suffered  severely  at  the  hands  of  manufacturers, 
who  without  having  formulated  a  sales  policy, 
assigned  a  competent  person  to  take  charge  of  the 
work,  or  planned  any  supplementary  circularizing, 
have  nevertheless  made  a  contract  for  space  in  one 
or  more  publications  and  then  waited  for  business 
to  develop.  The  capacious  lower  right-hand  drawer 
of  the  sales  manager's  desk  in  many  an  American 
factory  organization  is  filled  to  overflowing  with 
neglected  or  mishandled  foreign  correspondence, 
some  of  it  with  importing  firms  who  could  buy  the 
factory,  good  will  and  all,  without  serious  financial 
extension,  and  most  of  it  worthy  of  careful  atten- 


74    AMERICAN  METHODS  IN  FOREIGN   TRADE 

tion.  To  look  over  the  mass  would  make  any  good 
export  man  weep  for  the  lost  opportunities  it 
represents,  if  his  first  feeling  Avere  not  annoyance 
for  the  harm  done  those  who,  in  their  future  efforts 
to  get  a  foothold  in  foreign  markets,  must  first  con- 
vince foreign  buyers  that  they  are  not  like  other 
American  manufacturers  of  their  acquaintance. 

The  complaints  of  poor  packing,  lack  of  attention 
to  detail  and  w^hat  not  that  emanate  from  visiting 
foreigners,  returned  tourists  and  American  consuls 
and  are  repeated  ad  nauseam  by  the  press  and  by 
speakers  at  foreign  trade  conventions,  are  not  char- 
acteristics of  American  exporters,  but  originate  in 
the  attempts  of  foreign  buyers  to  do  business  with 
non-exporting  manufacturers  who  expect  trade  to 
be  handed  them  for  the  asking  or  to  be  won  for 
them  by  the  fruition  of  some  much-advertised 
scheme  for  removing  the  obstacles  which  are  sup- 
posed to  keep  foreign  orders  from  flooding  their 
mail.  It  is  the  manufacturer  wiio  is  willing  to  do 
everything  to  get  foreign  trade  except  work  hard 
for  business  and  handle  it  properly  when  he  gets  it, 
that  inspires  all  the  unfavorable  comment. 

In  the  meantime  the  skillful,  hardworking  builder 
of  foreign  distribution  and  good  will  receives  little 
attention.  "There  is  no  news  in  being  good,"  says 
Mr.  Dooley.  From  the  point  of  view  of  the  general 
public  this  is  true,  but  it  is  time  for  those  Ameri- 
cans who  are  really  interested  in  foreign  trade  to 
stop  listening  to  warnings  as  to  what  not  to  do  and 
find  out  how  their  manufacturing  neighbors,  the  best 
exporters  in  the  world,  have  built  up  a  world-wide 
demand  for  their  products. 


CHAPTER  XV 
THE  EXPORT  CATALOG 

The  export  catalog  is  one  of  the  stumbling  blocks 
of  the  beginner  in  direct  exporting.  There  is  no 
good  reason  for  this  except  a  provincial  disposition 
to  regard  other  peoples  from  our  own  point  of  view 
and  a  lack  of  realization  that  big  worth-while  things 
do  not  spring  into  being  over  night. 

No  matter  how  complete  your  line,  how  wide  the 
range  of  your  products,  do  not  regard  that  as  the 
all  essential  thing  to  be  demonstrated.  Do  not  gag 
a  prospective  overseas  buyer  by  trying  to  ram  all 
your  products  down  his  throat  at  the  start.  Rather 
use  some  of  them  as  appetizers.  Foreign  importers 
are  not  primarily  concerned  with  your  products. 
They  can  probably  get  them  from  many  sources. 
Their  first  interest  in  you  is  as  a  possible  source 
of  supply  for  goods  which  are  or  may  be  in  demand 
in  their  community. 

Do  not  think  that,  because  a  competitor,  who  is  an 
experienced  exporter,  has  a  very  elaborate  and 
voluminous  catalog,  you  must  imitate  it.  You  must 
creep  before  you  walk.  There  are  many  buyers  that 
the  rival  maker  does  not  sell  because  they  do  not 
like  him  or  his  methods,  because  he  has  overlooked 
or  neglected  them  or  because  for  some  reason,  such 
as  proximity  to  an  old  customer,  he  does  not  con- 
sider it  advisable  to  sell  them.    Keep  your  confi- 

75 


76    AMERICAN  METHODS  IN  FOREIGN  TRADE 

dence  in  your  owm  goods  and  policy,  disregard  com- 
petition and  go  out  and  make  a  start. 

Do  not,  therefore,  take  a  bulky  domestic  catalog 
that  is  the  result  of  your  many  years '  experience  in 
the  home  market,  translate  it  into  several  languages, 
print  it  at  great  expense  and  send  it  out  to  a  big 
list  of  possible  foreign  customers. 

Put  yourself  in  the  other  man's  place  and  try  to 
imagine  which  of  your  many  products  will  most  ap- 
peal to  him.  Get  advice,  by  all  means,  as  much  as  you 
can  of  it,  but  do  not  be  guided  by  it  alone.  You 
make  the  goods  and  have  sold  them  to  human  beings 
who  have  much  in  common  the  Avorld  over.  Listen 
to  what  others  say  but  put  it  to  the  acid  test  of 
your  own  special  knowledge  of  your  own  line. 
Never  eliminate  your  own  business  experience  as  a 
factor  in  formulating  your  export  selling  policy. 
If  you  find  something  in  this  book  that  does  not 
harmonize  with  what  you  have  learned  by  hard 
knocks,  throw  it  out.  Even  if  it  is  right,  it  is  prob- 
ably useless  to  you  because  you  will  not  carry  it 
out  sjanpathetically. 

Do  not  jump  at  the  opposite  conclusion  that  your 
first  export  catalog  can  consist  of  some  leaflets  de- 
scribing a  few  leaders  and  signed  ''Yours  very 
truly."  By  all  means  give  the  reader  a  line  on  the 
range  of  your  production,  the  excellence  of  your 
fabricating  facilities,  the  care  you  exercise,  the  skill 
of  your  workmen  and  everything  else  that  has  any 
bearing  on  your  desirability  as  a  source  of  supply. 
The  point  is  that  you  need  not  or  rather  ought 
not  to  start  with  an  export  catalog  that  illustrates 
and  describes,  in  great  detail,  every  product  and 


THE  EXPORT  CATALOG  77 

every  repair  or  replacement  part  that  you  make.  It 
is  all  right  to  do  that  for  "the  trade"  at  home  but 
wait  till  you  have  a  trade  abroad  to  do  it  for  and 
you  will  then  have  learned  enough  to  do  it  intelli- 
gently. 

Quote  only  list  prices  in  your  catalog,  reserving 
discounts  to  be  given  in  correspondence  or  by  en- 
closure of  separate  discount  lists.  Some  exj^orting 
manufacturers  quote  both  prices  and  discounts 
separately.  What  you  make  and  how  you  propose 
to  sell  it  must  decide  such  questions. 

Give  the  equivalents  in  the  metric  system  of  all 
weights  and  dimensions  that  appear  in  the  English 
system.  Where  extreme  accuracy  is  important, 
carry  out  the  decimals  four  places  if  necessary. 
Where  it  is  not,  two  places  will  suffice. 

Describe  just  how  your  goods  are  usually  packed 
for  export,  giving  the  weight  and  dimensions  of  each 
unit,  the  number  of  units  per  package,  box,  crate 
or  bale,  the  gross  and  net  weights  and  any  other 
information  that  may  be  necessary  to  satisfy  cus- 
toms requirements.  To  determine  these  matters, 
consult  with  freight  forwarders  and  other  service 
organizations  and  with  the  consuls  of  the  different 
countries  in  the  United  States. 

Write  the  copy  for  your  English  export  catalog 
in  the  plainest  and  simplest  language  possible. 
Avoid  technicalities  and  the  patter  of  your  craft. 
Many  trade  terms  which  are  current  in  the  United 
States  are  unintelligible  in  other  English-speaking 
countries.  If  you  have  lived  so  long  in  the  atmos- 
phere of  your  line  that  you  cannot  describe  it  in 
everyday,  universally  understandable  English,   do 


78    AMERICAN  METHODS  IN  FOREIGN  TRADE 

the  best  you  can  and  then  call  in  an  advertising 
man  who  knows  nothing  of  your  business  and  say : 

''Here  is  our  version  of  our  export  catalog.  It 
expresses  what  we  want  to  say.  Go  over  it  and  if  you 
find  anything  that  you  think  may  be  obscure  to 
New  Zealanders  or  South  Africans,  come  to  me  and 
I'll  explain  it  so  that  you  can  make  it  clear.  If 
you  find  it  desirable  to  leave  technical  terms  as  we 
have  them  and  they  cannot  be  found  in  any  ordinary 
dictionary,  do  not  hesitate  to  use  as  many  and  as 
voluminous  footnotes  as  you  deem  necessary." 

If  you  will  do  this  it  will  improve  your  catalog. 
The  man  who  might  have  understood  it  all  anj^how 
will  comprehend  and  appreciate  your  thoroughness 
and  the  man  who  might  not  have  grasped  the  mean- 
ing of  everything  will  be  delighted  by  your  effort 
to  make  all  things  plain. 

Particularly  is  this  plan  to  be  recommended  where 
the  original  is  to  be  translated  into  a  foreign 
language.  Many  alien  tongues  are  not  as  rich  as 
English  in  technical  terms  and  when  they  have  the 
exact  equivalents,  the  translator  may  not  know  it 
if  the  original  is  not  clear.  Always  remember  that 
only  ideas  are  translatable.  Words  have  their 
equivalents  but  stringing  equivalents  together  is  no 
true  translation  at  all  though  it  may  result  in  what 
is  sometimes  called  a  ''good  literal  translation" 
which  signifies  about  what  we  mean  when  we  say 
that  a  foreigner  expresses  himself  in  fairly  clear  but 
broken  English.  Every  idea  contained  in  the 
original  must  be  thoroughly  understood  by  a  trans- 
lator who  has  the  ability  to  express  himself  in  his 


THE  EXPORT  CATALOG  79 

language  reasonably  well,  in  order  to  give  you  an 
effective  foreign  catalog. 

It  is  very  discouraging  to  a  foreign  buyer  to  get 
in  touch  with  a  source  of  supply  whose  line  and 
policy  seem  right,  and  then  find,  when  he  undertakes 
a  thorough  study  of  it  as  described  in  a  catalog 
that  is  obviously  intended  for  his  use,  that  after 
sailing  along  smoothly  for  a  time,  he  runs  head  on 
into  an  immovable  mass  of  jagged  words — a  jargon 
that  is  all  the  more  exasperating  because  it  seems 
to  mean  something  but  the  significance  of  which 
eludes  the  most  painstaking  effort  to  grasp  it.  Do 
not  expect  such  buyers  to  write  you  for  explanations. 
Foresee  these  difficulties  and  steer  clear  of  them. 

As  you  progress  in  the  forming  of  foreign  con- 
nections you  will  learn  much  that  will  enable  you 
to  improve  and  enlarge  your  catalog.  The  better 
the  start,  the  quicker  your  advance  and  when  you 
arrive  at  the  point  where  you  are  sending  out  in 
various  languages  an  imposing  printed  presentation 
of  your  line  and  policy,  it  will  be  a  great  asset  to 
you  for  it  will  be  the  product  of  your  own  activities 
and  not  a  crude  and  palpable  imitation  of  what 
someone  else  is  doing. 


CHAPTER  XVI 
AMERICAN  SALESMEN  IN  FOREIGN  TRADE 

For  years  we  have  heard  much  about  the  com- 
mercial representatives  who,  with  over-praised 
German  efficiency,  are  trained  from  early  youth  for 
service  either  as  itinerant  salesmen  or  resident 
agents  in  overseas  markets.  We  have  been  told 
that  before  we  can  compete  with  Germany  in  world 
trade  young  Americans  must  learn  several  lan- 
guages and  otherwise  equip  themselves  by  special 
courses  of  study  to  spend  their  lives  traveling  about 
the  world  or  to  marry  into  good  families  in  foreign 
countries  and  settle  down  there  to  a  happy  life  as 
ambassadors  of  our  industrial  interests. 

If  our  future  as  an  exporting  nation  depends  upon 
our  persuading  thousands  of  able  young  Americans 
thus  to  expatriate  themselves  or  dedicate  them- 
selves to  a  wandering  existence  in  remote  corners 
of  the  world,  the  outlook  is  indeed  gloomy.  For- 
tunately, however,  our  self-appointed  export  ad- 
visers have  as  usual,  in  their  adherence  to  a  theory, 
overlooked  the  very  important  fact  that  for  years 
before  the  War  we  did  compete  very  successfully 
with  Germany  without  satisfying  this  supposed  re- 
quirement to  any  considerable  extent. 

There  are  no  set  rules  for  success  in  business.  One 
man  may  triumph  by  methods  which  would  spell 

80 


AMERICAN  SALESMEN  IN  FOREIGN  TRADE    81 

failure  for  another.  Each  must  work  along  the  lines 
best  suited  to  his  temperament  and  the  conditions 
which  environ  him.  The  pioneering  American 
manufacturer,  unable  to  find  or  train  for  himself 
any  considerable  number  of  high  class  overseas 
salesmen,  adapted  to  his  needs  the  materials  that 
he  found  ready  at  hand,  as  will  be  seen  later  on. 

Young  Germans  did  not  deliberately  choose  to 
dedicate  themselves  to  a  nomadic  existence  or  to 
exile  in  a  foreign  country  when  they  might  have 
found  as  good  or  better  opportunities  at  home. 
It  is  doubtful  if  they  could  have  been  persuaded 
to  take  this  course  under  such  circumstances.  The 
fact  is  that  the  fatherland  was  overcrowded  and 
far-seeing  political  and  industrial  leaders  simply 
turned  to  their  own  advantage  the  exodus  that  was 
therefore  inevitable  by  making  it  possible  for  the 
more  adventurous  spirits  to  foresee  a  greater  future 
in  selling  goods  abroad  than  in  emigrating  in 
search  of  opportunity  and  eventually  renouncing 
their  citizenship  as  so  many  of  former  generations 
did.  The  ''Dual  Allegiance"  of  which  we  heard  so 
much  in  the  early  years  of  the  great  war,  was  in  its 
economic  aspects  part  and  parcel  of  this  more  or 
less  successful  plan,  though  it  undoubtedly  had 
political  objects  of  equal  or  greater  importance. 
Thus  was  necessity  made  a  virtue  and  a  prospective 
loss  turned  into  an  asset,  but  this  would  not  have 
been  possible  in  any  country  in  which  economic 
conditions  did  not  cause  its  young  men  to  look  to 
other  lands  for  their  life  opportunity. 

Until  such  conditions  exist  and  are  similarly 
utilized  in  the  United  States  it  is  doubtful  if  we 


82    AMERICAN  METHODS  IN  FOREIGN  TRADE 

will  ever  have  an  adequate  supply  of  native-born 
and  specially  trained  Americans  as  foreign  trade 
salesmen.  May  the  flower  of  our  youth  ever  find 
great  opportunities  without  leaving  the  land  of  their 
birth  and  severing  home  ties  for  all  time. 

Fortunately,  however,  there  are  always  more  ways 
than  one  to  accomplish  any  given  business  purpose. 
Let  us  see  how  American  manufacturers  have  given 
the  rest  of  the  world  its  most  dreaded  competition 
in  world  markets  practically  without  the  use  of 
trained  salesmen  attached  to  their  home  office  and 
without  the  local  co-operation  of  American  business 
men  resident  in  foreign  countries. 

In  the  first  place,  in  that  large  proportion  of  lines 
which  have  found  the  exclusive  agency  plan  of  ad- 
vantage, the  manufacturer  has  no  need  of  salesmen 
in  the  ordinary  sense.  The  whole  problem  is  placed 
squarely  on  the  shoulders  of  resident  agents  who 
act  as  sales  managers  for  their  territory.  These 
representatives  themselves  may  be  English,  French, 
Italian,  Spanish  or  of  other  nationalities.  They  may 
or  may  not  be  natives  of  the  countries  in  which 
they  do  business.  Many  of  the  best  South  American 
agents  for  American  lines  were,  previous  to  1914, 
German  or  of  German  descent.  The  men  employed 
by  them  were  of  many  different  extractions  but 
usually  they  were  born  and  educated  in  the  country 
in  which  they  worked. 

Ordinarily  it  matters  little  to  the  American  manu- 
facturer what  blood  flows  through  the  veins  of  his 
agents  or  of  the  men  whom  the  latter  employ  to  do 
the  intensive  selling  work  for  them.  He  is  only 
concerned  with  their  standing,  with  their  ability  to 


AMERICAN  SALESMEN  IN  FOREIGN  TRADE    83 

interpret  the  spirit  of  his  organization  and  with  the 
results  they  obtain. 

Right  here  it  may  be  well  to  correct  a  widespread 
misapprehension  regarding  the  influence  of  national 
feeling  on  international  trade.  There  seems  to  be 
an  impression  that  the  Englishman  gives  the 
preference  to  British  goods,  the  Frenchman  to  the 
products  of  the  factories  of  his  home  country  and 
so  on.  Experienced  export  men  will  testify  that  in 
practice  they  encounter  very  little  patriotic  preju- 
dice of  this  kind.  The  first  consideration  of  busi- 
ness men  everywhere  is  the  assurance  of  continued 
and  increasing  profit  and,  quite  regardless  of  the 
country  of  origin,  they  usually  buy  or  represent 
the  lines  of  goods  that  in  their  judgment  are  the  best 
for  their  territory.  English,  French,  Italian  and 
even  German  firms  have  frequently  handled  Ameri- 
can products  to  the  virtual  exclusion  of  goods  made 
in  their  own  home  lands. 

This,  it  may  be  remarked  in  passing,  is  the  chief 
reason  why  a  national  trade  mark,  applied  indis- 
criminately to  all  goods  made  in  a  given  country,  is 
useless.  Under  normal  conditions,  free  from  the 
violent  prejudice  engendered  by  war,  agents  and 
dealers  are  principally  concerned  with  their  con- 
tinued profit  and  users  are  chiefly  interested  in  the 
suitability  to  their  needs  of  the  goods  or  articles 
purchased.  Where  they  are  made  matters  little. 
How  well  made  and  fairly  priced  they  are  is  very 
important  and  in  no  country  is  a  high  standard  of 
quality  consistently  maintained  by  all  makers  in  all 
lines. 

In  this  connection  also  it  may  also  be  well  to  con- 


84    AMERICAN  METHODS  IN  FOREIGN  TRADE 

sider  liow  practical  are  the  theories  regarding  the 
value  to  manufacturers  of  fostering  a  so-called 
*' American  atmosphere"  in  overseas  markets. 
There  is  no  question  that  the  better  foreign  business 
men  know  us  and  our  methods,  the  closer  will  be 
our  commercial  relations,  but  in  view  of  the  mani- 
fest difficulty  of  making  it  attractive  for  large 
numbers  of  American  citizens  to  settle  down  and 
form  colonies  in  the  large  trade  centers  of  our 
principal  overseas  markets,  is  it  not  at  present  more 
feasible  for  our  individual  manufacturers  to  go  on 
creating  American  atmosphere  in  the  offices  of  the 
firms  they  do  business  with  in  the  way  that  they 
have  in  the  past,  that  is,  by  forming  practical  busi- 
ness friendships  and  seeing  to  it  that  these  relations 
become  permanent? 

To  return  to  the  question  of  salesmen,  the  only 
necessary  traveling  by  direct  representatives  of 
manufacturers  who  use  the  exclusive  agency  plan 
consists  of  trips  for  appointing  agents  and  for  over- 
seeing their  work  in  a  spirit  of  co-operation.  Such 
journeys  are  always  made  by  the  export  manager 
or  an  assistant  and  do  not  involve  continuous  ab- 
sence from  the  United  States  for  long  periods.  They 
are  or  may  be  alternated  with  intervals  of  work  in 
the  home  office  where  the  plans  for  co-operation 
originated  by  such  visits,  must  be  developed. 
Thus  the  exclusive  agency  plan  practically  elim- 
inates the  need  of  employment  by  the  manufacturer 
of  what  are  ordinarily  called  traveling  salesmen. 

Those  who  use  the  general  merchandizing  plan 
of  foreign  trade  building  obviously  have  no  one  to 
relieve  them  of  the  necessity  of  maintaining  a  staff 


AMERICAN  SALESMEN  IN  FOREIGN  TRADE    85 

of  traveling  salesmen.  Usually  a  start  is  first  made 
by  a  well-planned  and  carefully  executed  campaign 
of  circularizing  and  advertising  with  painstaking 
attention  to  the  correspondence  thus  developed. 

As  the  business  grows  the  export  manager  is  con- 
fronted with  the  necessity  of  cultivating  the  field 
more  intensively  by  the  employment  of  salesmen. 
Some  have  solved  it  in  the  nearer  countries  by 
training  young  Americans  with  a  knowledge  of  the 
necessary  foreign  language  (usually  Spanish)  to 
cover  these  markets  from  the  home  office  while 
others,  seeing  the  difficulty  and  almost  prohibitive 
expense  involved  in  this  line  of  procedure  if  car- 
ried out  in  the  more  distant  countries,  have  adopted 
the  plan  of  appointing  in  each  territory  a  resident 
manufacturer's  agent  with  experience  in  allied  lines 
and  consequent  acquaintance  with  the  trade. 

These  resident  selling  representatives  should  not 
be  confused  with  exclusive  agents  who,  as  has  been 
stated,  act  to  all  intents  and  purposes  as  managers 
of  factory  branches.  The  selling  agent  now  re- 
ferred to  also  has  his  own  territory  and  is  interested 
in  all  business  secured  there,  but  here  the  resem- 
blance ends,  for  his  compensation  is  a  salesman's 
commission  (usually  10 7o  or  less),  he  carries  no 
stock,  takes  orders  only  for  the  account  of  the  manu- 
facturer, assists  in  making  collections  and  adjusting 
complaints  and  in  general  does  for  the  factory  or- 
ganization exactly  what  any  traveling  salesman  is 
supposed  to  do  for  his  firm. 

Such  selling  agents,  in  consideration  of  a  com- 
mission to  be  paid  on  all  orders  or  collections  from 
their  territory,   agree  to  travel  it,   in  person  or 


86    AMERICAN  METHODS  IN  FOREIGN  TRADE 

tlirougli  associates,  and  use  their  best  efforts,  in 
harmony  with  those  of  the  manufacturer,  to  secure 
business.  They  are  seldom  importers  on  their  own 
account,  as  this  would  place  them  in  direct  com- 
petition with  some  of  their  best  customers,  the 
commission  on  whose  orders  is  worth  more  than  the 
possible  profit  on  goods  the  salesmen  themselves 
might  import. 

If  the  manufacturer  who  adopts  this  plan  will 
select  his  selling  agents  with  the  care  and  delibera- 
tion w^hich  he  exercises  when  taking  on  domestic 
salesmen,  it  is  quite  possible  to  build  up  an  effective 
organization  in  all  important  foreign  markets. 
Here  again  nationality  is  of  minor  importance,  the 
chief  considerations  being  character  and  ability. 
As  the  question  of  credit  is  all  on  the  manufacturer's 
side,  little  inquiry  as  to  the  financial  standing  of 
applicants  is  necessary  beyond  ascertaining  that 
they  are  able  to  assume  the  risk  of  conducting  their 
selling  efforts  until  sufficient  business  is  developed 
to  make  them  self-supporting.  In  some  cases 
where  otherwise  well  qualified  men  are  unable  to 
finance  the  introductory  work,  it  has  been  found  ad- 
vantageous to  make  certain  monthly  or  quarterly 
advances  to  cover  expenses  until  such  time  as  they 
may  gradually  be  deducted  from  commission  checks. 

Negotiations  with  such  selling  agents  may  be 
opened  by  circularizing,  by  advertising  in  export 
publications  or  by  a  personal  canvass  of  the  various 
trade  centers  on  the  part  of  a  representative  of  the 
manufacturer.  Unless  the  circmnstances  are  un- 
usually convincing  it  is  customary  to  make  only 
tentative    arrangements,    especially   if   the   maker 


AMERICAN  SALESMEN  IN  FOREIGN  TRADE    87 

already  has  by  his  own  unaided  efforts  developed 
a  considerable  volume  of  business  in  the  territory. 
These  and  other  precautions  will  occur  readily  to 
any  ordinarily  good  business  man. 

The  selling  agent  has  one  decided  advantage  over 
the  salesman  sent  out  from  the  manufacturer's  home 
office.  He  has  local  standing,  social  and  commer- 
cial, and  knows  his  territory.  If  his  previous  busi- 
ness experience  has  been  in  allied  lines,  his  personal 
acquaintance  with  individual  importing  whole- 
salers and  retailers  may  quickly  develop  business 
which  it  would  take  a  stranger  months,  perhaps 
even  years,  to  secure.  His  disadvantage  is  that  he 
may  lack  special  training  in  selling  any  given  prod- 
uct but  this  the  good  export  manager  will  soon 
remedy.  Many  such  agents  visit  the  factories  they 
represent  regularly  and  consider  themselves  as 
much  a  part  of  their  sales  organizations  as  do  the 
senior  domestic  salesmen. 

A  few  of  our  exporters  are  experimenting  with 
a  plan  by  which  carefully  selected  young  natives 
of  other  countries  are  brought  to  the  United  States 
on  a  nominal  salary  and  are  given  a  thorough  train- 
ing at  the  home  office  under  the  watchful  eye  of 
the  foreign  sales  manager.  One  pronounced  success 
among  many  partial  or  complete  failures  will  fully 
compensate  such  expenditure  of  time  and  money. 
Enough  has  already  been  accomplished  along  these 
lines  to  demonstrate  the  value  of  the  plan  if  capably 
carried  out. 

Thus  have  American  manufacturers  solved  the 
problem  of  adequate  sales  representation  in  foreign 
markets.    There  is  nothing  to  prevent  others  from 


88    AMERICAN  METHODS  IN  FOREIGN  TRADE 

following  in  their  footsteps  if  they  will  formulate 
a  sound  policy  and  then  work  it  out  patiently  and 
with  due  regard  for  the  interests  of  all  whom  these 
activities  bring  into  association  w^ith  them. 


CHAPTER  XVII 

CO-OPERATING  WITH  FOREIGN  AGENTS 
AND  DEALERS 

One  of  the  characteristics  that  distinguishes  the 
work  of  American  manufacturers  in  foreign  markets 
from  that  of  their  European  and  especially  their 
German  competitors  is  the  intelligent  interest  they 
take  in  the  welfare  of  their  agents  or  dealers  and 
in  seeing  that  their  products  give  satisfaction  to 
the  user.  There  is  nothing  new  or  original  in  this, 
for  with  us  it  is  the  accepted  thing  in  domestic  selling, 
but  few  American  executives  realize  how  far  we  are 
in  advance  of  the  rest  of  the  world  in  this  respect. 
The  refinements  of  dealer  co-operation  are  so  dis- 
tinctively American  that  when  introduced  into 
overseas  selling  and  patiently  and  thoroughly  car- 
ried out,  they  have  placed  our  manufacturers  in  a 
position  to  disregard  competition.  Again  the  reader 
is  reminded  that  the  best  American  export  methods 
are  but  adaptations  of  those  that  are  used  at  home 
as  a  matter  of  course,  yet  the  results  they  have 
given  abroad  led  observant  German  consuls,  as  far 
back  as  1905,  to  voice  many  warnings  from  their 
posts  in  South  America  and  elsewhere. 

There  is  virtually  nothing  that  we  have  worked 
out  along  these  lines  that,  suitably  modified,  is  not 
applicable   to   conditions   in  all   foreign   markets. 

89 


90    AMERICAN  METHODS  IN  FOREIGN  TRADE 

Under  the  exclusive  agency  plan  the  export  man- 
ager or  his  trained  assistants  frequently  takes 
charge  on  the  ground  of  training  the  men  whom 
sales  representatives  have  selected.  Skilled  demon- 
strators and  repair  men  are  sometimes  sent  out  to 
become  temporarily  identified  with  agents'  organ- 
izations till  such  time  as  others  become  sufficiently 
acquainted  with  the  line  to  take  their  places. 
Representatives  are  encouraged  to  visit  the  home 
factory  to  further  cement  the  business  relation- 
ship, to  study  selling  methods  and  to  carry  back 
with  them  that  degree  of  confidence  and  enthusiasm 
which  only  results  from  an  intimate  acquaintance 
with  the  organization  behind  the  product  and  the 
care  with  which  it  is  made. 

Agents  are  not  only  encouraged  but  shown  how 
to  circularize  their  market.  Ordinarily  the  circu- 
lars to  be  used  are  prepared  by  the  export  manager 
in  collaboration  with  the  advertising  department, 
submitted  to  the  foreign  representative  for  sugges- 
tions and,  when  satisfactory  in  form,  are  supplied 
by  the  manufacturer  to  the  agent,  mailed  out  direct 
or  both.  Lists  to  be  circularized,  compiled  by  ex- 
port publications  or  service  organizations  of  various 
kinds,  may  be  submitted  to  agents  for  cross  check- 
ing or  to  be  supplemented  with  the  names  of  buyers 
as  yet  unknown  in  this  country.  Circulars  are 
usually  sent  out  over  the  names  of  the  manufacturer 
coupled  with  that  of  the  agent  as  local  sales  repre- 
sentative. 

Under  the  general  merchandizing  plan,  many 
forms  of  dealer  co-operation  are  possible.  Here,  too, 
circularizing  and  the  supplying  of  printed  matter 


CO-OPERATING  WITH  FOREIGN  AGENTS     91 

for  store  distribution  play  an  important  role. 
Sampling  and  demonstrating  campaigns  are  fre- 
quently very  much  worth  while.  Suggestions  for 
window  displays  and  supplying  display  devices, 
hangers,  posters  and  electrotypes  have  all  been 
found  helpful.  The  manufacturer  should  always 
keep  in  mind  the  fact  that  in  but  few  if  any  foreign 
markets  has  scientific  merchandizing  been  devel- 
oped to  the  extent  that  it  has  in  this  country.  By 
fully  acquainting  himself  with  the  methods  overseas 
dealers  are  using  and  the  conditions  under  which 
they  are  working,  it  may  frequently  be  possible  to 
make  better  merchants  of  them  by  tactfully  sug- 
gesting the  use  of  plans  and  equipment  with  which 
the  manufacturer's  experience  in  domestic  selling 
work  has  made  him  so  familiar  that  he  sometimes 
forgets  that  everyone  else  does  not  know  about  them. 

Some  of  our  exporting  manufacturers  keep  a  file 
of  exterior  and  interior  views  of  their  foreign  cus- 
tomers' establishments  together  with  all  obtainable 
data  regarding  their  circumstances  and  methods 
solely  as  a  guide  to  intelligent  co-operation.  There 
are  instances  where  they  have  with  excellent  results 
advised  the  use  of  special  store  equipment  coupled 
with  estimates  and  the  offer  to  purchase  and  ship 
on  the  merchant's  order. 

Not  a  little  can  be  accomplished  by  the  manu- 
facturer's constituting  himself  a  source  of  informa- 
tion and  advice  regarding  lines  of  goods  made  in 
the  United  States.  Foreign  dealers  who,  as  before 
stated,  want  to  know  a  great  deal  not  only  about 
the  goods  they  handle,  but  also  about  the  organiza- 
tions back  of  them,  often  experience  great  difficulty 


92    AMERICAN  METHODS  IN  FOREIGN  TRADE 

in  attaining  the  intimate  knowledge  that  they  require 
before  stocking  a  new  line  or  accepting  a  substitute 
for  one  previously  carried.  To  supply  this  means 
some  investment  of  time  and  money,  but  it  is  almost 
invariably  profitable,  directly  or  indirectly.  In 
territories  where  the  manufacturer  has  a  sales 
representative,  all  assistance  extended  to  dealers 
should  of  course  be  with  the  co-operation  of  this 
salesman  who  may  be  kept  advised  of  the  status 
of  each  account  by  copies  of  letters  received  and  the 
answers  thereto  and  by  frequent  direct  communica- 
tions from  the  home  office. 

Generally  speaking,  lines  for  which  general  pub- 
lication advertising  is  beneficial  at  home,  must,  to 
achieve  the  greatest  possible  results  in  foreign 
markets,  receive  the  benefit  of  similar  publicity. 
The  importance  of  this  subject  is,  however,  so  great 
that  it  will  be  given  a  chapter  by  itself. 

The  good  exporting  manufacturer  carries  into 
foreign  markets  that  conscientious  regard  for  the 
ultimate  user  that  has  done  so  much  to  build  up 
good  will  for  him  at  home.  Till  the  consumer,  that 
most  important  factor  in  trade,  is  not  only  satisfied 
and  comes  back  for  more,  but  also  goes  out  of  his 
way  to  tell  others  of  his  gratification,  foreign  selling 
has  not  been  developed  to  its  highest  possibilities. 
The  ways  in  which  this  can  be  accomplished,  pro- 
vided of  course  that  the  goods  are  right,  are 
numerous  and  familiar  to  all  good  sales  managers. 
Special  mention  may,  however,  be  made  of  the  guar- 
antee tag  authorizing  the  dealer  to  replace  at  the 
expense  of  the  manufacturer  any  article  which  in 
his  judgment  has  within  a  given  period  of  time  been 


CO-OPERATING  WITH  FOREIGN  AGENTS     93 

found  defective  in  quality  or  workmanship.  Sucli 
tags,  printed  in  tlie  dealer's  language  and  attached 
to  samples,  accompanied  by  a  statement  that  all 
goods  ordered  would  be  so  guaranteed,  have  fre- 
quently led  dealers  to  stock  lines  of  higher  first 
cost,  when  in  no  other  way  could  they  have  been 
so  quickly  convinced  by  the  manufacturer's  claims 
of  superiority. 

Another  distinguishing  mark  of  the  good  export- 
ing manufacturer  is  his  manner  of  handling  com- 
plaints from  overseas  importers.  The  doctrine  that 
the  customer  is  always  right  may  sometimes  work 
injustice  or  hardship,  but  if  any  foreign  agent 
or  dealer  whose  standing  is  unquestioned  and 
whose  good  will  is  therefore  a  great  asset,  cannot 
readily  and  tactfully  be  convinced  that  his  claim 
is  an  unjust  one,  it  is  better  to  satisfy  it  in  full. 
Avoid  lengthy  squabbles  and  partial  agreements. 
Do  not  try  to  make  the  other  man  meet  you  half  way 
if  he  thinks  that  you  should  go  the  whole  distance. 
Rather  put  him  under  obligations  than  let  him  feel 
that  you  have  taken  the  slightest  advantage  of  him. 
Forget  the  immediate  dollar  and  keep  your  eye  on 
the  hundreds  and  thousands  that  he  will  make  for 
you.    It  pays. 

All  this  may  seem  to  the  reader  to  make  the  road 
to  export  success  a  difficult  one,  but  the  carrying  out 
of  all  the  suggested  lines  of  thought  and  action 
must  of  course  be  a  development.  In  the  beginning 
the  manufacturer,  with  a  full  realization  of  the 
value  to  him  of  foreign  markets,  with  faith  in  his 
product,  and  having  in  mind  a  definite  selling  plan 
should  enter  the  field  determined  to  bring  home  to 


94    AMERICAN  METHODS  IN  FOREIGN  TRADE 

distributors  and  users  alike,  tlie  fullest  possible 
realization  of  what  he  has  to  offer  and  of  the  ex- 
cellence of  his  intentions.  In  doing  this,  if  he  will 
remember  his  domestic  experience  and  keep  in  mind 
the  fact  that  human  nature  is  much  the  same  the 
world  over,  all  the  rest  will  come  easily  and 
naturally. 


CHAPTER  XVni 

GENERAL  PUBLICATION  PUBLICITY  IN 
FOREIGN  MARI^TS 

Manufacttjkers  who  have  found  general  advertis- 
ing to  be  essential  to  the  complete  success  of  their 
sales  efforts  in  the  home  market  should  also  use 
such  publicity  in  building  up  foreign  distribution, 
especially  in  the  more  important  countries. 

There  is  some  difference  of  opinion  as  to  the  best 
way  to  handle  general  publicity  abroad.  Many 
manufacturers  whose  overseas  business  has  been 
built  up  on  the  exclusive  agency  basis  have  left  the 
details  of  each  local  advertising  campaign  almost 
if  not  entirely  in  the  hands  of  their  resident  repre- 
sentatives. In  such  cases  the  agent  may  set  aside 
a  percentage  of  his  total  sales,  the  manufacturer 
contributing  an  equal  amount,  or  the  latter  may  bear 
the  entire  expense  involved.  This  appropriation  the 
agent  may  place  as  he  sees  fit,  contracting  either 
direct  with  publishers  or  through  local  advertising 
organizations. 

Sometimes  when  the  amount  involved  is  large  and 
is  appropriated  almost  entirely  by  the  manufac- 
turer, the  latter  stipulates  that  the  final  schedules 
and  plans  must  be  looked  over  and  approved  by 
his  export  and  advertising  departments.  In  much 
the  same  way  exporters  who  use  the  general  mer- 

95 


96    AMERICAN  METHODS  IN  FOREIGN  TRADE 

cliandizing  method  sometimes  put  their  publicity- 
campaigns  in  the  hands  of  their  local  salesmen. 
Occasionally  the  manufacturer  makes  direct  ar- 
rangements with  advertising  agents  in  each  market, 
who  supposedly  work  in  harmony  with  sales  repre- 
sentatives on  the  ground. 

All  these  plans  have  the  advantage  of  relieving 
the  home  office  of  much  detail  work,  but,  in  this  as 
in  other  matters,  the  greatest  success  does  not  come 
to  the  man  who  gives  too  much  importance  to  such 
a  consideration.  Generally  speaking,  the  more 
closely  identified  the  manufacturer  is  with  the 
efforts  made  to  stimulate  a  demand  for  his  product, 
the  better  the  result  in  the  long  run. 

In  no  country  has  the  use  of  publicity  attained 
the  degree  of  effectiveness  that  it  has  in  the  United 
States.  It  is  only  necessary  to  look  over  the  columns 
of  the  best  publications  issued  in  other  parts  of  the 
world  to  make  this  fact  readily  apparent.  This 
being  so,  it  follows  that  foreign  sales  and  adver- 
tising agents,  no  matter  how  high  their  standing, 
how  great  their  knowledge  of  local  conditions  or 
how  high  their  ability  in  every  respect,  can  hardly 
be  qualified  to  obtain  for  an  American  manufac- 
turer the  greatest  possible  results  in  the  handling 
of  general  publicity.  However  painstaking  may  be 
the  supervision  of  their  efforts  exercised  by  the 
home  office,  there  is  a  point  beyond  which  the  most 
diplomatic  critic  cannot  go  under  the  circumstances, 
and  the  result  is  usually  a  compromise  that  is  un- 
satisfactory to  all  concerned.  Sometimes,  too,  local 
representatives  are  prejudiced  in  favor  of  media 
which,  if  the  facts  were  at  hand,  the  manufacturer 


GENERAL  PUBLICATION  PUBLICITY        97 

would  regard  as  unsuitable.  Often  no  satisfactory 
evidence  that  insertions  are  made  as  planned  can 
be  obtained  from  abroad  by  the  advertiser. 

As  so  frequently  reiterated  in  the  preceding  pages, 
the  best  export  methods  are  adaptations  of  those 
found  best  for  each  line  in  the  home  market  and 
this  applies  with  special  emphasis  to  advertising. 

The  best  plan  seems  to  be  that  of  selecting  an 
advertising  agent  residing  in  the  United  States  to 
handle  all  overseas  campaigns.  There  are  a  number 
Gf  organizations  that  confine  themselves  almost  ex- 
clusively to  placing  advertising  abroad  and  in  re- 
cent years  some  of  the  large  domestic  agents  have 
developed  very  efficient  foreign  departments.  These 
firms  possess  an  intimate  acquaintance  with  condi- 
tions and  media  in  foreign  markets,  have  standing 
with  local  publishers  abroad,  know  how  to  do  busi- 
ness with  them,  and,  most  important  of  all  from  the 
advertiser's  point  of  view,  they  are  here  on  the 
ground  where  they  can  consult  and  work  w^th  the 
executives  of  the  manufacturer's  export  and  ad- 
vertising departments.  They  are  also  in  a  position 
to  insure  through  their  checking  departments  that 
the  plan  adopted  is  being  carried  out. 

Advertising  campaigns,  if  prepared  by  such 
agents  sufficiently  in  advance,  may  be  submitted  to 
local  sales  representatives  abroad  for  suggestive 
criticism,  thus  obtaining  the  benefit  of  their  ac- 
quaintance with  conditions  gained  by  actual  selling 
work  on  the  ground. 

There  are  of  course  exceptions.  The  use  of 
street-car  and  out-door  advertising  in  some  foreign 


98    AMERICAN  METHODS  IN  FOREIGN  TRADE 

cities  can  probably  be  handled  to  better  advantage 
by  sales  representatives  or  advertising  agents  lo- 
cated in  these  centers,  though  this  form  of  pub- 
licity, effective  as  it  is  in  some  fields,  bears  so  in- 
considerable a  relation  to  the  whole  subject  that 
it  is  of  no  great  moment  to  the  average  exporter. 
Probably  each  manufacturer,  after  making  a  study 
of  the  circumstances  involved,  can,  by  the  exercise 
of  his  own  common  sense,  determine  upon  a  policy 
which,  while  varying  with  the  conditions  surround- 
ing his  distribution  in  each  market,  will  for  all 
practical  purposes  approximate  what  is  theoretic- 
ally best. 

At  this  point  the  subject  of  trademark  registra- 
tion deserves  attention.  No  local  advertising 
campaign  should  of  course,  be  initiated  without 
obtaining  all  due  protection  afforded  by  the  laws  of 
each  country.  In  fact,  there  are  a  few  countries, 
of  which  Argentine  and  Cuba  are  the  best  known 
and  most  striking  examples,  where  only  priority  of 
registration  counts  and  where,  therefore,  this  matter 
should  be  attended  to  when  the  first  sales  are  made 
or  at  least  before  the  line  attracts  the  attention  of 
those  who  make  a  practice  of  preying  on  manu- 
facturers' ignorance  of  local  laws. 

Trademarks  should,  of  course,  invariably  be 
registered  in  the  name  of  the  manufacturer.  This 
seems  elemental,  but  a  surprisingly  large  number 
of  exporters  have  in  the  past  entrusted  the  carrying 
out  of  the  necessary  formalities  to  local  representa- 
tives or  friendly  dealers,  only  to  discover,  on  the 
rupture  of  business  relations,  that  their  trademarks 
were  owned  by  the  latter  and  that  the  rights  thereto 


GENERAL  PUBLICATION  PUBLICITY        99 

could  only  be  obtained  by  tliose  justly  entitled  to 
tliem  either  by  long  and  tedious  negotiation  or  by 
process  of  law,  either  of  which  alternatives  has 
usually  been  found  to  be  expensive. 

There  are  many  large  firms  of  patent  and  trade- 
mark lawyers  that  can  take  care  of  foreign  regis- 
tration and  some  work  along  these  lines  has  been 
done  by  various  service  organizations  operating 
through  attorneys  located  on  the  ground. 

The  manufacturer  must  be  prepared  for  some  dis- 
appointment in  the  appearance  of  foreign  adver- 
tising media.  In  few  if  any  countries  has  the 
printing  art  been  developed  to  the  extent  that  it  has 
in  the  United  States,  nor  are  publication  owners  ac- 
customed to  meet  the  demand  for  exact  compliance 
with  instructions  that  is  taken  for  granted  here.  As 
a  rule  it  is  better  not  to  entrust  composition  to  the 
foreign  publisher  no  matter  how  carefully  the  wishes 
of  the  advertiser  may  be  indicated.  Rather  set  each 
announcement  for  the  space  desired  and  send  only 
electrotypes  of  it.  Also  be  prepared  to  overlook 
some  variation  in  the  schedule  of  insertions. 
Foreign  publishers  are  frequently  unable  to  com- 
prehend why  you  should  object  to  slight  changes  in 
style  of  type  or  why,  if  space  is  lacking  in  the  Mon- 
day edition,  it  is  not  just  as  satisfactory  from  your 
point  of  view  to  have  an  announcement  scheduled 
for  that  day  appear  on  Tuesday.  This  attitude 
is  sincere,  however  unreasonable  it  may  seem  to 
us,  and  in  the  absence  of  media  conducted  more 
in  accordance  with  our  ideas,  it  is  foolish  to 
argue  about  it  at  long  range.  This  is  one  of  the 
situations  that  must  be  accepted  as  gracefully  as 


100     AMERICAN  METHODS  IN  FOREIGN  TRADE 

possible  wherever  it  develops,  limiting  oneself  to 
a  diplomatic  attempt  to  explain  the  manufacturer's 
point  of  view,  till  such  time  as  a  better  understand- 
ing of  the  theory  of  modern  advertising  can  be 
inculcated. 

Similarly  it  is  often  difficult  or  impossible  to  ob- 
tain sworn  statements  or  other  circulation  guaran- 
tees, not  necessarily  because  the  figures  given  are 
widely  inaccurate,  but  because  no  records  are  kept 
in  readily  available  form.  In  such  cases  the  state- 
ments made  are  estimates  and,  while  probably  never 
doing  the  publisher  any  injustice,  they  are  not, 
except  in  very  few  cases,  seriously  exaggerated. 

These  disadvantages  are  offset  by  some  com- 
pensations, for  it  will  be  found  that  in  markets 
where  publishers  are  so  little  acquainted  with 
modern  advertising  methods,  they  attribute  much 
less  value  to  their  space  and  are  therefore  inclined 
to  offer  it  at  rates  much  lower  than  we  are  accus- 
tomed to  pay  for  publicity  in  similar  media  of  the 
same  circulation  at  home. 

The  publication  business  in  many  foreign  lands 
is  still  at  the  stage  of  development  that  it  was  in 
this  country  not  so  many  decades  ago,  when  the 
chief  source  of  income  was  circulation  and  adver- 
tising was  regarded  as  a  by-product  out  of  which 
the  publisher  got  what  he  could  without  too  much 
expense  or  inconvenience.  This  does  not  make  the 
space  any  less  valuable,  but  for  his  own  peace  of 
mind  the  exporting  manufacturer  who  contemplates 
using  it  should  have  an  adequate  realization  of  the 
situation. 


CHAPTER  XIX 
FOREIGN  CREDITS 

Are  foreign  credits  safe  ?  Tliis  question  has  been 
frequently  asked  and  a  great  deal  of  affirmative 
evidence  has  been  offered  by  experienced  export 
managers.  Yet  in  these  discussions  this  basic  fact, 
which  seems  to  dispose  of  the  question  finally,  has 
usually  been  overlooked. 

Normal  commercial  exchange  everywhere  rests  on 
credit.  If  the  character  and  financial  condition  of 
any  considerable  percentage  of  the  business  men 
of  any  land  were  such  that  they  could  not  be  relied 
on  to  meet  their  obligations,  then  the  commerce  of 
that  country  could  never  develop  beyond  the  primi- 
tive stage. 

Credit  can  therefore  be  safely  extended  anywhere 
in  the  world  where  trade  conditions  have  advanced 
any  considerable  distance  beyond  the  barter  basis, 
if  the  same  care  is  exercised  as  in  domestic  transac- 
tions. But  can  due  discretion  be  employed  without 
the  investment  of  too  much  time  and  money? 

This  question  is  answered  by  the  fact  that  hun- 
dreds of  American  manufacturers  have  done  and 
are  doing  it.  The  necessary  information  is  on  file 
with  service  organizations  or  export  publishers,  or 
it  can  be  obtained  by  them  at  a  cost  that  is  not 
excessive  considering  the  fact  that  the  average  size 
of  export  orders  is  much  larger  than  in  domestic 

101 


102     AMERICAN  METHODS  IN  FOREIGN   TRADE 

trade  because  the  foreign  merchant  must,  as  else- 
where shown,  be  much  more  forehanded  and  import 
in  quantity. 

The  export  manager  can  obtain  much  credit  in- 
formation for  himself  by  encouraging  prospective 
buyers  to  make  it  possible  to  investigate  their  stand- 
ing. They  may  be  induced  to  accompany  their  first 
orders  by  letters  from  local  banks  or  refer  to 
other  manufacturers  with  whom  they  have  credit. 
Our  established  exporters  are  almost  invariably 
glad  to  assist  their  foreign  customers  and  fellow 
manufacturers  by  responding  freely  and  frankly  to 
all  inquiries  regarding  the  standing  of  firms  \^dth 
which  they  do  business. 

Can  an  exporter  realize  anything  like  the  full 
possibilities  of  a  foreign  market  without  extending 
credit?  In  most  lines,  emphatically,  no.  In  the  first 
place,  until  the  relations  of  a  manufacturer  with  a 
foreign  customer  have  progressed  to  the  point 
where  the  assumption  of  warranted  risk  is  taken  as 
a  matter  of  course,  there  cannot  exist  that  degree 
of  close  co-operation  which  is  so  essential  to  the 
highest  development  of  distribution.  It  does  not 
matter  how  assiduously  the  good  will  of  the  merchant 
is  cultivated  if  these  efforts  are  marred  by  a  per- 
sistent refusal  to  grant  the  accommodation  to  which 
he  is  entitled.  Such  a  stand  is  justly  taken  as  evi- 
dence of  narrowness  of  vision  or  lack  of  confidence, 
either  of  which  is  certain  to  be  looked  upon  as  an 
undesirable  characteristic  in  a  house  that  seeks  to 
be  regarded  as  a  permanent  source  of  supply. 

There  is  an  economic  reason  also.  A  merchant's 
capacity  to  do  business  is  measured  by  his  ability, 


FOREIGN  CREDITS  103 

capital  and  credit.  The  first  two  no  one  can  take 
away  from  liim,  but  with  them  alone  he  is  handi- 
capped. An  important  function  of  credit  is  the 
multiplication  of  the  usefulness  of  capital  and  the 
manufacturer  who  insists  on  demanding  cash  where 
accommodation  is  customary  and  warranted,  not 
only  automatically  limits  his  o\\ti  opportunity  to  do 
business,  but  deprives  his  customer  of  a  right  which 
he  has  earned  and  which  is  just  as  real  an  asset  as 
his  cash  on  hand.  To  refuse  to  extend  credit  wher- 
ever it  is  justified  is  an  economic  injury  to  the  seller 
and  is  both  an  economic  and  moral  injustice  to  the 
buyer. 

There  are  exceptions  to  every  rule.  In  distribu- 
ting some  products,  such  as  automobiles,  the  exten- 
sion of  credit  is  not  customary  and  is  not  therefore 
usually  expected,  but  it  may  well  be  doubted 
whether  manufacturers  who  have  sufficient  capital 
to  do  so,  are  not  depriving  themselves  of  a  great 
advantage  by  not  departing  from  the  accepted 
procedure  in  their  line.  Export  commission  houses 
accept  risks  on  all  kinds  of  goods  and  "Wliat  man 
has  done,  man  may  do." 

In  other  lines,  such  as  heavy  machinery  built  to 
specifications,  some  part  of  the  selling  price  is  ex- 
acted in  advance,  any  balance  due  being  collected 
by  draft,  shipping  documents  being  deliverable  on 
payment  thereof.  Sometimes  advance  liquidation  of 
the  whole  amount  is  required,  but  if  the  standing  of 
the  buyer  is  good,  there  is  little  chance  that,  where 
from  25  to  50%  of  the  total  cost  has  been  paid,  the 
balance  will  not  be  forthcoming  in  order  to  obtain 
the  shipment. 


104     AMERICAN  METHODS  IN  FOREIGN  TRADE 

Foreign  credits  are  much  easier  to  pass  on  than 
are  those  that  must  be  considered  in  the  home  field 
for  the  reason  that  only  firms  of  considerable  size 
Avho  can  import  profitably'  are  entitled  to  or  expect 
to  be  granted  time  in  which  to  meet  their  obliga- 
tions. Most  overseas  buyers  are,  from  the  manufac- 
turer's viewpoint,  either  good  or  bad.  There  is  no 
large  class  of  doubtful  risks  which  is  the  bane  of 
the  domestic  credit  department. 

Foreign  importers  of  standing  realize  that  their 
good  name  is  one  of  their  greatest  assets  which,  once 
impaired,  is,  on  account  of  their  prominence  and 
the  long  range  at  which  they  must  do  business 
across  frontiers  and  language  barriers,  very  difficult 
to  reestablish.  They  are  therefore  extremely  jeal- 
ous of  it.  There  are  instances  where  manufac- 
turers of  known  standing  have  by  mistake  drawn  on 
overseas  customers  for  large  amounts  not  due  them 
and  the  drawees  have  paid  in  full  without  hesita- 
tion, leaving  the  adjustment  of  the  matter  to  cor- 
respondence, rather  than  allow  a  draft  made  by  a 
source  of  supply  kno^m  to  their  bank  to  go  back 
dishonored.  Such  cases  are  accidental  and  perhaps 
extreme,  but  they  illustrate  the  disposition  of 
foreign  buyers  generally. 

American  credit  managers  who  sidestep  the  op- 
portunity to  pass  on  foreign  risks,  lose  the  benefit 
of  a  very  broadening  influence  with  the  consequent 
limitation  of  their  o^vn  usefulness  and  progress 
and  of  the  future  of  their  firms.  To  many  of  our 
credit  men,  the  thought  of  allowing  good  mer- 
chandise to  go  across  the  seas  where  the  arm  of  our 
domestic  collection  laws  is  powerless  to  reach,  is 


FOREIGN  CREDITS  105 

little  short  of  appalling.  If  they  will  but  shake  off 
their  provincialism  and,  realizing  that  human  na- 
ture is  universal  and  that  business  honor  is  not 
the  exclusive  attribute  of  any  one  race,  gradually 
familiarize  themselves  with  existing  facilities  for 
obtaining  information,  they  can  make  a  conserva- 
tive start  in  the  extension  of  foreign  credits  with 
no  loss  of  sleep.  As  for  collection  laws,  there  are, 
as  previously  stated,  few  doubtful  foreign  risks  and 
little  is  to  be  gained  by  litigation  of  the  remarkably 
small  percentage  of  accounts  that  go  bad  when 
sound  judgment  is  used.  For  the  universal  testi- 
mony of  export  managers  is  that  a  smaller  propor- 
tion of  bad  debts  are  crossed  off  the  books  by  the 
export  department  than  are  charged  against  the 
activities  of  the  domestic  sales  department. 

The  form  in  which  credit  is  extended  abroad 
varies  with  the  line  and  the  locality.  The  open 
account  is  rightly  frowned  upon  but  cannot  always 
be  avoided  where  it  is  customary.  It  is  the  policy 
of  American  export  managers  to  restrict  this  form 
of  credit  as  much  as  possible  without  interfering 
too  seriously  with  the  growth  of  their  business.  The 
preferred  method  is  the  documentary  time  draft 
drawn  at  60  or  90  days  sight,  on  accepting  which 
the  necessary  papers  enabling  the  consignee  to  ob- 
tain the  shipment  are  released.  The  accepted  draft 
fixes  a  definite  date  of  payment,  and  with  its  various 
endorsements  constitutes  a  trade  acceptance  which 
is  a  credit  instrument  of  flexibility,  passing  readily 
from  hand  to  hand  till  paid. 

Such  drafts,  to  be  most  acceptable  from  the  view- 
point of  the  international  banker,  should  be  drawn 


106     AMERICAN  METHODS  IN  FOREIGN  TRADE 

on  the  consignee  or  his  agent,  in  favor  of  the  drawer 
and  endorsed  by  the  latter  in  blank.  Frequently  it 
is  arranged  that  they  draw  interest  until  paid  and 
that  collection  charges  are  to  be  borne  by  the 
drawee,  this  understanding  being  indicated  by  writ- 
ing in  red  ink  on  the  face  of  the  draft  after  the 
amount  for  which  it  is  drawn,  the  clause  ''Interest 
and  collection  charges  added."  Bills  thus  drawn 
are  ordinarily  salable  at  par  in  the  New  York  or 
other  foreign  exchange  markets,  recourse  being  had 
on  the  drawer  in  case  the  drawee  fails  to  pay. 

The  subject  of  foreign  exchange  is  too  involved 
to  discuss  in  this  volume.  How  and  why  the  buying 
and  selling  of  foreign  drafts  yields  a  profit  to  those 
engaged  in  it  without  loss  or  injustice  to  either  the 
drawer  or  the  drawee  is  interesting  but  of  no  imme- 
diate concern  to  the  beginner  in  overseas  trade. 
The  one  illuminating  fact  for  him  to  keep  in  mind 
is  that  the  exchange  market  serves  the  inter- 
national traders  of  all  countries  in  the  same  way 
that  a  clearing  house  benefits  its  member  banks.  It 
ordinarily  makes  it  possible  to  balance  up  import 
and  export  transactions  against  each  other  with  lit- 
tle or  no  exchange  of  gold  between  countries  whose 
reciprocal  sales  and  purchases  are  thus  in  the  long 
run  made  to  offset  each  other  directly  or  indirectly. 
If  this  is  kept  in  mind  the  exporter  soon  learns  by 
experience  all  he  needs  to  know  about  foreign 
exchange. 

The  beginner  in  world  trade  should  realize  that  the 
extension  of  credit  is  a  gradual  development  and 
that  he  can  feel  his  way  along  this  road  without  tak- 
ing any  serious  chances.    Many  foreign  buyers  have 


FOREIGN  CREDITS  107 

bank  credits  in  New  York  or  elsewhere  in  this  coun- 
try, others  buy  only  through  established  export 
commission  houses,  the  result  being  in  both  cases 
that  all  transactions  with  them  are  virtually  cash 
in  advance.  The  essential  thing  is  to  keep  an  open 
mind,  considering  each  case  on  its  merits  and  re- 
fraining from  assuming  that,  because  it  is  possible 
to  avoid  all  risk  in  some  instances,  that  every  buyer 
can  be  persuaded  to  make  payment  in  the  same  way. 
Each  responsible  foreign  importer  is  entitled  to  in- 
sist on  doing  business  as  he  chooses  and  the  manu- 
facturer who  attempts  to  dictate  in  these  matters 
thereby  restricts  his  foreign  distribution.  No  as- 
sumption of  unwarranted  risks  is  required  or  ex- 
pected. The  foreign  buyer  expects  you  to  be  a  good 
business  man,  but  he  also  demands  that  he  be  treated 
like  one  and  allowed  his  just  dues. 


CHAPTER  XX 
INTERNATIONAL  CROOKS 

There  are  dishonest  men  everywhere  and  they 
exist  in  other  lands  in  about  the  same  proportion 
as  we  find  them  at  home.  To  the  beginner  in  direct 
exporting  this  may  seem  too  conservative  an  esti- 
mate but  he  must  bear  in  mind  that  the  advent  of 
a  new  source  of  supply  into  the  field  of  international 
commercial  exchange  first  attracts  the  attention  of 
a  crowd  of  swindlers,  known  to  export  men  as  inter- 
national crooks,  who  depend  for  their  livelihood  on 
yictimizing  aspiring  exporters  whose  anxiety  to  get 
a  start  may  make  them  willing  to  take  unbusiness- 
like chances. 

The  international  crook  may  operate  in  a  variety 
of  ways  but  he  has  but  one  aim.  He  endeavors  to 
persuade  manufacturers  to  make  shipments  of 
goods  to  his  port  without  adequate  financial  or 
moral  guarantee  that  he  will  get  his  money.  Such 
goods  may  be  accepted  and  not  paid  for  or  they 
may  be  refused  at  the  port  of  entry,  leaving  the 
shipper  the  choice  of  spending  almost  as  much  as 
they  are  worth  to  get  them  back  or  of  abandoning 
them  to  be  sold  at  auction.  In  the  latter  event,  which 
is  the  usual  outcome,  the  crook,  knowing  the  con- 
tents and  value  of  the  shipment,  is  able  to  bid  it  in 
intelligently  and  profitably. 

108 


INTERNATIONAL  CROOKS  109 

These  swindlers  are  often  endowed  with  great 
powers  of  deception.  They  may  operate  under 
several  names,  bolstering  up  the  standing  of  each 
one  of  them  by  referring  to  all  the  rest.  They  may 
pay  cash  for  the  first  few  small  orders  and  later, 
by  their  apparent  rectitude  and  business  ability, 
persuade  manufacturers  to  extend  credit  on  larger 
shipments  in  order  to  co-operate  in  building  up  an 
apparently  widening  market. 

There  is  just  one  real  protection  against  this 
gentry.  Subject  every  overseas  order  involving  any 
risk  whatever  to  the  acid  test  of  good  business 
methods.  The  foreign  buyer  of  standing  does  not  ex- 
pect you  to  be  unbusinesslike.  Do  not  trust  anyone 
too  far  on  his  own  representations  or  on  what  per- 
sons or  firms  unknown  to  you  say  about  him.  Make 
the  prospective  distributor  of  your  goods  furnish 
references  in  the  United  States  or  give  some  sound 
reason  why  he  cannot  do  so.  The  man  who  will  not 
respond  to  a  courteous  request  to  do  this  may 
safely  be  let  alone.  Follow  up  any  leads  he  gives 
you  even  to  the  extent  of  investigating  the  standing 
of  those  he  refers  to  if  they  are  not  well  known 
to  you.  Supplement  the  data  thus  assembled  by  the 
reports  of  at  least  one  and  preferably  several  of  the 
service  bureaus,  export  publications  or  other  insti- 
tutions in  this  country  who  have  the  facilities  for 
making  independent  investigations.  Then  submit 
the  whole  file  to  your  credit  man  and  ask  him  how 
much  he  would  consider  the  prospective  buyer  good 
for  if  he  were  located  in  this  country.  With  this 
verdict  at  hand,  proceed  with  just  as  light  a  heart 
as  you  would  if  your  correspondent  were  not  doing 


110     AMERICAN  METHODS  IN  FOREIGN  TRADE 

business  beyond  our  political  frontiers  which  for 
your  purposes  are  just  lines  on  a  map  and  not  in- 
dications of  the  uttermost  boundaries  of  commercial 
honor  and  rectitude. 

If  all  our  manufacturers  follow  this  course,  the 
international  crook  will  either  starve  to  death  or 
turn  his  evil  attentions  toward  more  fruitful  fields. 
No  one  abroad  can  swindle  you  out  of  very  much 
if  you  make  him  run  the  same  gauntlet  that 
eliminates  dishonest  men  at  home.  The  losses  of 
our  experienced  exporting  manufacturers  who  have 
extended  credit  in  all  parts  of  the  world  over  a  long 
period  of  years  and  on  every  conceivable  basis,  sel- 
dom average  over  one-fourth  of  one  percent  and 
usually  less.  One-eighth  and  one-tenth  of  one  per- 
cent are  not  unusual. 

It  has  been  stated  elsewhere  that  the  good  ex- 
porter, while  protecting  himself  from  the  bad,  might 
even  utilize  it  to  good  ends.  Some  instances  where 
the  attempted  swindling  of  international  crooks 
has  been  turned  to  advantage  are  interesting. 

Export  managers  who  have  been  tricked  into  mak- 
ing shipments  which  the  customs  authorities  have 
threatened  to  sell  at  auction  have  at  times  turned 
the  tables  by  writing  some  well-established  house 
on  which  they  have  for  some  time  been  working,  out- 
lining just  what  has  happened,  describing  the  exact 
contents  and  value  of  the  shipment  and  offering  to 
instruct  the  bank  holding  the  dishonored  draft  to 
turn  over  all  documents  without  payment  provided 
the  firm  would  agree  to  pay  the  duty,  put  the  goods 
in  stock  and  sell  them  at  the  price  they  themselves 
would  have  charged  if  they  had  ordered  and  paid 


INTERNATIONAL  CROOKS  111 

for  them.  After  the  goods  are  sold,  they  are  em- 
powered to  do  whatever  they  consider  fair,  from 
keeping  all  the  proceeds  to  remitting  the  full  value 
of  the  goods  F.O.B.  United  States  port. 

In  this  way  what  seemed  like  a  hopeless  mess 
has  been  converted  into  an  opening  w^edge  on  a 
difficult  prospect.  Frequently  a  large  part  of  a 
prospective  total  loss  has  thus  been  salvaged  and  a 
valuable  new  customer  placed  on  the  books,  for 
many  foreign  houses  on  accepting  such  a  proposi- 
tion, have  not  only  been  just  enough  to  retain  only 
a  fair  profit  for  themselves  but  have  also  found  the 
goods  so  satisfactory  that  they  reordered  them  on 
their  own  initiative. 

To  Mr.  Walter  F.  Wyman  we  are  indebted  for 
a  description  of  a  constructive  way  to  utilize  the 
activities  of  international  crooks.  When  he  receives 
an  order  from  someone  who,  on  investigation,  does 
not  appear  to  be  entitled  to  the  credit  asked,  instead 
of  brusquely  demanding  advance  payment  of  the 
cash  which  the  other  man  probably  does  not  possess 
and  cannot  obtain,  he  replies,  courteously  giving  his 
reasons  for  not  acquiescing  in  the  terms  asked  but 
offering  to  ship  direct  to  any  local  firm  of  sufficient 
standing  that  will  assume  responsibility  for  the  pay- 
ment of  the  draft  and  to  instruct  the  bank  that 
handles  the  transaction  to  pay  the  correspondent  a 
stated  salesman's  commission  before  remitting  the 
proceeds  to  the  shipper. 

It  frequently  happens  that  the  irresponsible 
sender  of  the  order  either  has  a  very  good  idea  as 
to  where  he  can  dispose  of  the  shipment  or  has 
already  sold  it  and,  seeing  no  possibility  of  obtain- 


112     AMERICAN  METHODS  IN  FOREIGN  TRADE 

ing  his  hoped-for  illegitimate  profit,  will  take  what 
he  can  get.  He  can  assure  himself  in  advance  of 
receiving  his  fair  commission  by  previous  arrange- 
ment with  a  local  bank  made  by  him  in  accordance 
with  the  shipper's  suggestion. 

Thus  have  international  crooks  been  not  only 
foiled  but  turned  to  good  account  by  ingenious 
American  sales  executives.  It  is  not  beyond  the 
range  of  possibility  that  some  of  them  may  thus  be 
led  in  time  to  see  prospects  of  better  profits  in  fair 
dealing. 

The  international  crook  constitutes  no  serious 
obstacle  to  building  up  a  foreign  trade  if  the  builder 
has  ability  and  is  in  earnest.  The  beginner  should 
however  be  warned  that  he  exists  and  must  be 
thwarted  or  circumvented.  He  must  never  be  re- 
garded as  typical  of  any  element  but  his  own  in 
foreign  markets.  Above  all  his  activities  should 
never  be  allowed  to  discourage  the  fledgling  direct 
exporter. 


CHAPTEE  XXI 
HANDLING   FOREIGN   CORRESPONDENCE 

If  every  foreign  inquiry  that  comes  to  American 
manufacturers  during  the  course  of  any  one  normal 
year  were  properly  handled  by  an  able  export  man- 
ager backed  up  by  a  sound  and  liberal  policy,  the 
resulting  increase  in  our  overseas  trade  would  be 
nothing  short  of  enormous. 

Why  it  is  that  so  many  American  manufacturers 
who  are  successful  at  home  suddenly  seem  to  become 
bereft  of  all  ordinary  business  judgment  when  con- 
fronted with  a  foreign  inquiry  is  a  matter  that  de- 
serves psychological  research.  In  spite  of  the  fact 
that  the  man  at  the  other  end  is  a  being  with  all 
or  most  of  the  physical,  mental  and  moral  attributes 
of  other  humans,  it  seems  hard  for  many  to  grasp 
the  fact  that,  even  if  he  wears  strange  clothes, 
speaks  an  unintelligible  language  and  cleaves  to 
more  wives  than  is  openly  possible  in  this  country, 
in  business  matters  his  ideas  and  experience  very 
closely  parallel  our  own.  He  in  his  own  environ- 
ment deals  with  exactly  the  same  elements  and  is 
influenced  and  developed  thereby.  It  is  to  many 
American  business  men  a  revelation  how  closely 
they  and  their  foreign  customers  agree  on  what  is 
good  business  and  what  is  not,  on  what  is  right  and 
what  is  wrong. 

113 


114     AMERICAN  METHODS  IN  FOREIGN   TRADE 

Taking  a  sound  export  policy  and  breadth  of 
human  understanding  for  granted,  perhaps  the 
most  important  consideration  in  handling  foreign 
correspondence  is  scrupulous  attention  to  detail. 
Unless  you  are  yourself  an  expert  in  foreign  lan- 
guages, have  the  export  publication  or  service 
bureau  that  you  have  selected,  translate  for  you  all 
incoming  letters  not  written  in  English.  Failure  on 
your  part  to  grasp  shades  of  meaning  or  more 
serious  sins  of  omission  are  very  irritating  to  a 
correspondent  thousands  of  miles  away.  Your  com- 
petitor with  inferior  goods  or  higher  prices  may,  by 
answering  the  same  inquiry  with  what  might  seem 
to  you  like  meticulous  care,  land  an  order  and  a 
valuable  business  connection  to  boot  while  you  are 
wondering  why  you  hear  nothing  more  from  the 
prospective  customer. 

Assume  that  your  correspondent,  whether  he  says 
so  or  not,  wants  to  know  every  fact  that  will  assist 
him  in  deciding  whether  to  place  a  trial  order  with 
you.  Tell  him  all  about  your  line,  the  size  and 
weight  of  the  unit,  the  number  of  units  to  the  pack- 
age, crate  or  bale,  the  net  and  gross  weights  of  the 
minimum  shipment,  and  how  it  is  safeguarded 
against  the  risks  of  ocean  transportation.  Look  up 
the  customs  regulations  of  his  country  and  give  him 
any  special  information  required  by  them.  Do  not 
be  afraid  of  writing  a  long  letter  or  of  enclosing  too 
many  informative  leaflets  or  catalogs.  Remove 
everj;  possible  obstacle  to  a  trial  order  that  you 
can  see  or  divine. 

Much  of  this  information  can  be  presented  in 
your  catalog  or  in  leaflet  form,  thus  cutting  dowoi 


HANDLING  FOREIGN  CORRESPONDENCE    115 

the  length  of  your  letter  by  simply  referring  to  such 
enclosures.  The  export  catalog  is  discussed  else- 
where in  this  volume  but  attention  cannot  too  often 
be  called  to  the  importance  of  including  in  it  an 
attractive  statement  of  your  business  policy  and 
your  standing  in  the  industrial  or  commercial  world. 

Have  all  out-going  letters  translated  into  the 
language  in  which  previous  communications  re- 
ceived from  the  same  correspondent  were  written. 
This  seems  an  obvious  courtesy,  but  it  is  surprising 
how  frequently  it  is  overlooked.  With  the  entirely 
adequate  facilities  that  exist  for  this  purpose,  this 
particular  form  of  boorishness  is  inexcusable. 

Answer  all  letters  received  that  require  a  reply. 
No  matter  how  trivial  the  subject  matter  or  how 
seemingly  unimportant  your  correspondent,  it  does 
not  pay  to  allow  his  communication  to  go  unnoticed. 
Send  at  least  a  form  letter  designed  courteously  to 
discourage  further  advances. 

From  the  opening  of  correspondence  with  a  pros- 
pective foreign  customer,  an  attempt  should  be  made 
to  draw  from  him  all  possible  data  regarding  his 
standing  so  that,  while  business  negotiations  are 
progressing,  you  may  become  sufficiently  well-in- 
formed in  this  respect  to  enable  your  credit  depart- 
ment, with  the  reports  obtained  from  export  pub- 
lications or  service  bureaus  also  at  hand,  to  make 
a  prompt  decision  as  to  the  extent  to  which  credit 
may  be  safely  granted.  Some  exporters  neglect  this 
and  require  cash  with  the  first  order  pending  an 
investigation,  but  this  is  scarcely  a  forehanded 
procedure  or  one  that  makes  the  best  of  impressions 
on  a  foreign  business  man. 


116     AMERICAN  METHODS  IN  FOREIGN  TRADE 

By  all  means  follow  up  good  foreign  prospects  by- 
mail.  The  length  of  time  for  which  this  should  be 
done  may  vary  somewhat  for  each  line,  but  a  good 
export  manager  will  never  cease  working  on  a  pos- 
sible customer  with  whom  he  has  once  been  in  touch 
and  Avho  remains  in  business,  even  though  he  may 
after  a  certain  period  cease  to  give  special  attention 
to  an  individual  case.  This,  of  course,  does  not 
apply  where  previous  correspondence  reveals  situa- 
tions which  make  what  seemed  like  good  prospects, 
either  undesirable  or  very  unlikely  future  customers. 

There  is  an  extreme  but  very  illuminating  instance 
on  record  where  an  American  manufacturer 
developed  a  large  order  for  mill  equipment  by  five 
years  of  follow-up  w^ork.  The  original  request  for 
an  estimate  came  from  a  man  who  on  investigation 
proved  to  be  of  good  standing,  with  experience  in 
his  line,  but  ^^dthout  any  considerable  capital, — cer- 
tainly not  enough  to  buy  the  equipment  in  question. 
The  latter  fact  was,  however,  offset  by  his  business- 
like statement  to  the  effect  that  he  was  planning 
to  combine  his  resources  with  those  of  some  friends 
to  start  a  plant  and  needed  the  estimate  for  pur- 
poses of  preliminary  discussion. 

The  estimate  was  sent  with  a  number  of  helpful 
suggestions  from  the  maker  *s  experience  with 
similar  cases.  It  was  duly  acknowledged.  Every 
six  months  thereafter  the  figures  were  corrected  by 
m.ail  to  conform  to  subsequent  variations  in  market 
conditions,  some  inquiry  was  made  as  to  the  prog- 
ress of  the  prospect's  plans  and  the  hope  was  ex- 
pressed that  he  might  succeed  in  working  them  out 
and  be  in  a  position  to  favor  the  manufacturer. 


HANDLING  FOREIGN  CORRESPONDENCE    117 

Each  of  these  follow-up  communications  elicited  a 
courteous  reply  giving  the  reasons  for  the  delay. 

At  the  end  of  five  years  an  immensely  profitable 
order  came  through, — an  order  which,  incidentally, 
a  German  bank  tried  to  switch  to  a  German  manu- 
facturer by  taking  advantage  of  the  necessity  on 
the  part  of  the  local  promoters  of  giving  a  guarantee 
for  a  portion  of  the  purchase  price.  Fortunately  the 
American  firm  that  had  worked  so  hard  to  get  this 
order  was  able,  with  the  co-operation  of  the  buyers 
on  the  ground,  to  club  this  institution  into  submis- 
sion. Query  for  those  who  believe  the  German 
banks  to  have  been  a  source  of  strength  to  the  indus- 
tries of  their  home  country — How  much  real  good 
will  can  institutions  which  use  such  methods  build 
up  in  any  community? 

To  return  to  the  question  of  follow-up  work,  the 
length  of  time  between  each  communication  should 
be  enough  to  allow  for  receiving  an  answer.  By  a 
little  study,  rules  covering  this  point  may  easily  be 
formulated  for  each  country  or  for  groups  of  coun- 
tries served  by  the  same  steamship  lines. 

The  use  of  form  letters  and  paragraphs  in  foreign 
correspondence  deserves  some  attention.  Para- 
graphs in  all  the  principal  commercial  languages 
which  may  easily  be  copied  by  a  careful  typist,  are 
used  to  advantage  by  many  export  managers  in  re- 
plying to  first  inquiries.  This  saves  some  dictation 
in  English  and  much  unnecessary  translation  work. 

Form  letters  in  various  languages  have  also  been 
found  quite  effective  when  used  by  manufacturers 
whose  product  is  sold  by  general  merchandizing 
methods  and  who  must  therefore  carry  on  a  heavy 


118     AMERICAN  METHODS  IN  FOREIGN  TRADE 

correspondence  with  a  very  large  number  of  firms. 
Where  the  unit  is  large  and  prospective  buyers 
fewer  in  number,  it  is  perhaps  best  to  endeavor  to 
give  to  each  communication  a  distinctive  touch. 

Foreign  correspondence  should  reflect  throughout 
the  spirit  of  the  firm's  export  policy.  Many  Ameri- 
can manufacturers  whose  success  long  ago  placed 
them  in  an  invincible  position  at  home,  have  allowed 
their  business  communications  to  become  stand- 
ardized and  lifeless  presentations  of  facts.  In  the 
foreign  field  these  houses  must  discard  such  routine 
methods  and  inject  some  of  the  human  element  into 
the  written  word. 


CHAPTER  XXII 
HEAVY  MACHINERY  IN  FOREIGN  MARKETS 

Amebican  makers  of  equipment  involving  en- 
gineering problems,  such  as  machine  tools,  public 
utilities  equipment,  and  machinery  for  factories, 
mines,  steam  laundries,  repair  shops  and  similar 
enterprises  have  usually  found  it  to  their  advantage 
to  appoint  in  each  country  or  important  trade 
center,  as  exclusive  agent  for  their  line,  a  local  en- 
gineering house  of  experience  and  standing.  Where 
satisfactory  firms  of  this  kind  do  not  exist,  engineer- 
ing and  selling  representatives  are  sent  out  to  work 
with  one  or  more  local  importers  in  securing  orders 
and  installing  equipment. 

In  foreign  markets,  where  the  engineering  repre- 
sentative is  not  or  does  not  become  qualified  to 
assume  full  responsibility,  it  is  necessary  or  advis- 
able in  connection  with  all  important  contracts,  to 
supply  a  skilled  man  to  oversee  the  installation, 
make  sure  that  it  is  operating  properly  and  some- 
times even  to  take  temporary  charge  of  the  plant 
until  such  time  as  others  are  trained  to  assume  the 
management  of  it.  This  involves  no  hardship,  for 
such  service  is  stipulated  and  charged  for  in  the 
original  estimate.  This  course  is  far  preferable  to 
that  of  leaving  a  man  or  group  of  men  to  wrestle 
with  unfamiliar  engineering  problems  in  order  to 

119 


120     AMERICAN  METHODS  IN  FOREIGN  TRADE 

realize  on  their  heavy  investment,  with  all  the  con- 
sequent engendering  of  ill-will  for  the  manufacturer 
and  the  retarding  influence  on  the  development  of 
local  enterprises  using  similar  equipment.  The 
burden  of  the  dissatisfaction  in  the  use  of 
machinery,  justly  or  unjustly,  falls  on  the  manufac- 
turer and  unfavorable  mention  travels  fast. 

The  advantages  of  an  intimate  connection  with  a 
good  local  engineer  or  engineering  firm  are  mani- 
fold even  though  the  maker  assume  practically  all 
of  the  responsibility  for  the  installation  and  suc- 
cessful operation  of  the  equipment  sold.  Such  a 
representative  is  constantly  on  the  ground  and  in 
touch  with  developments,  has  standing  in  his  com- 
munity and  can  take  care  of  all  routine  matters  to 
the  entire  satisfaction  of  all  concerned.  There  are 
many  instances  where  large  orders  for  which  the 
competition  was  close  have  been  placed  with  the 
maker  whose  local  connections  tipped  the  scale  in 
his  favor. 

The  working  plan  in  such  cases  is  exactly  that 
of  exclusive  agency  as  outlined  in  Chapter  IX,  ex- 
cept that  in  transactions  involving  large  amounts  of 
money  the  maker  must,  of  necessity,  play  a  more 
important  part  in  concluding  the  special  financial 
arrangements  that  are  usually  made  in  such  cases. 

The  extension  of  credit,  in  the  ordinary  mercan- 
tile sense,  plays  little  part  in  these  transactions. 
Everything  supplied,  being  built  to  specifications,  is 
difficult  to  realize  on  if  not  accepted  and  paid  for 
as  originally  expected.  The  custom  therefore  is  to 
require  an  initial  payment  of  25  or  33%  in  advance 
with  a  guarantee  from  a  bank  of  standing  in  the 


HEAVY  MACHINERY  IN  FOREIGN  MARKETS    121 

United  States  or  the  country  of  destination  or  from 
a  responsible  export  house  for  the  payment  of  the 
rest  on  delivery  or  installation,  or  it  may  be  pro- 
vided that  such  balance  be  paid  in  installments  as 
the  work  progresses  under  suitable  guarantees  by 
both  parties  to  the  arrangement. 

Makers  of  heavy  machinery  should,  directly  or 
through  their  representatives,  keep  in  close  touch 
with  new  enterprises  as  announced  in  the  local  press 
of  foreign  countries  or  as  revealed  in  other  ways, 
and,  by  advertising  and  circularizing  in  each  mar- 
ket, keep  their  names  and  the  nature  of  their  lines 
constantly  before  the  more  substantial  business  men 
who  are  likely  to  become  interested  in  such  equip- 
ment. Often  this  advertising  and  circularizing, 
particularly  in  countries  where  little  industrial 
progress  has  been  made,  should  be  educational 
rather  than  competitive.  It  should  be  designed  to 
arouse  interest  in  the  development  of  the  industry 
in  which  the  line  is  used  rather  than  to  promote 
the  sale  of  the  line  made  by  any  one  manufacturer. 
The  maker  who  thus  succeeds  in  showing  business 
men  new  opportunities  and  places  himself  at  their 
service  for  further  enlightenment,  has  the  best 
chance  of  getting  any  orders  that  may  later  result. 

Machinery  manufacturers  have  found  export  pub- 
lications of  great  value  in  originating  inquiries 
from  prospective  agents  and  users  and,  through 
their  service  departments,  in  assisting  in  the  con- 
duct of  negotiations  leading  to  suitable  arrange- 
ments for  representation  and  the  placing  of  orders. 

The  heavy  machinery  field  offers  exceptional  op- 
portunities for  export  combinations,  not  of  compet- 


122     AMERICAN  METHODS  IN  FOREIGN  TRADE 

ing  firms  as  contemplated  by  the  advocates  of  the 
Webb-Pomerene  Act,  but  of  large  makers  of  non- 
competitive equipment.  Such  coalitions  should  be 
organized  as  separate  corporations  with  control 
in  the  hands  of  those  whose  lines  are  to  be  sold 
by  them.  These  companies  should  assume  all  of  the 
selling  cost,  order  from  manufacturers  for  their 
own  account  and  take  their  profit  on  all  sales.  The 
manufacturers  represented  would  thus  get  their 
profits  on  all  equipment  purchased  from  them,  and 
as  stockholders,  would  also  participate  in  the 
dividends  of  the  export  company  representing  their 
lines. 

Such  combinations,  as  they  progress,  have  a  great 
advantage  in  securing  the  best  possible  foreign 
representation  and  can  effect  large  economies  in  in- 
stallation, the  benefit  of  which  would,  under  far- 
sighted  management,  accrue  directly  to  the  pur- 
chaser, and  indirectly  to  the  makers  in  the  form  of 
a  constantly  widening  market. 

In  forming  these  combinations  the  usual  objec- 
tions on  the  ground  of  divided  control  or  rather  the 
inability  of  any  one  maker  to  control  cannot  be 
avoided  though  they  may  to  some  extent  be  met. 
Then  too,  the  difficulty  of  making  an  agreement  be- 
tween such  a  company  and  a  manufacturer,  that 
adequately  protects  the  latter  in  case  of  dissatis- 
faction and  rupture  of  relations,  is  a  formidable  one. 

For  this  reason,  perhaps,  such  combinations  of 
this  kind  as  now  exist  are  loosely  held  together  by 
the  personality  and  ability  of  an  export  agent  who, 
as  he  progresses,  adds  new  but  allied  lines,  making 
a  separate  agreement  with  the  maker  of  each.    It 


HEAVY  MACHINERY  IN  FOREIGN  MARKETS    123 

is  much  easier  to  establish  a  feeling  of  confidence 
between  a  manufacturer  and  a  selling  agent  than 
among  several  men  to  be  associated  in  the  same 
enterprise  and  on  the  same  footing. 


CHAPTER  XXIII 

THE  EXPORTATION  OF  RAW,  STAPLE  AND 
STANDARDIZED  PRODUCTS 

All  the  preceding  chapters  refer  primarily  to  the 
exportation  of  lines  in  which  quality  is  an  important 
factor.  Such  products  as  wheat,  lumber,  dried  fish, 
packing  house  products,  leather,  paper,  wool, 
metals,  steel  products,  textiles,  kerosene  and  others 
that  are  graded  or  made  to  conform  to  standards, 
have  little  or  no  individuality  and  the  importers' 
and  users'  interest  in  the  original  source  of  supply 
is  correspondingly  decreased.  Nor  is  the  producer, 
maker  or  shipper  much  concerned  with  the  ultimate 
destination  of  his  product  or  with  the  attitude  to- 
ward him  of  those  who  use  it. 

In  the  exportation  of  some  of  these  lines  sales- 
manship may  be  a  factor  to  a  limited  extent,  but 
it  can  only  be  used  to  create  good  will  for  the  in- 
dividual exporters  among  importers  abroad.  The 
great  volume  of  this  business  is  done  on  a  marketing 
rather  than  a  merchandizing  basis  and  success  de- 
pends on  intimate  acquaintance  with  the  market, 
efficient  and  economical  management,  a  reputation 
for  fair  dealing  and  service  to  buyers.  The  seller 
cannot  set  his  figure  and  then  go  out  and  get  it. 
Prices  are  automatically  regulated  by  conditions  be- 
yond his  control  and  his  margin  of  profit  is  what 

124 


STANDARDIZED  PRODUCTS  1^5 

remains  out  of  the  difference  between  the  selling 
price  and  his  purchasing  or  producing  cost  after 
paying  the  expense  of  doing  business.  His  trade 
and  the  profit  thereon  may  be  increased  in  some 
lines  which  enter  into  price  competition  if  he  ar- 
rives at  a  point  where  his  efficiency  in  production  or 
business  management  permits  him  to  undersell 
competitors. 

It  seems  very  clear  that  the  merchandizing  prob- 
lem of  the  maker  of  distinctive  quality  articles 
differs  essentially  from  the  marketing  problem  of 
producers  or  exporters  of  raw,  staple  or  stand- 
ardized lines. 

The  first,  taking  his  cost  of  production  and  add- 
ing to  it  his  selling  expense  and  profit,  transfers 
his  product  at  the  resulting  price  to  one  or  more 
middlemen,  who  in  turn  must  get  their  expenses  and 
profits  out  of  what  the  customer  pays  for  it.  Suc- 
cess depends  chiefly  on  convincing  the  user  that  it 
is  worth  its  final  cost  even  though  this  may  be  higher 
than  the  price  at  which  he  can  buy  competing  prod- 
ucts. The  maker's  as  well  as  the  middleman's  in- 
crease in  profit  must  depend  on  the  steady  growth 
of  the  volume  of  sales  due  to  the  skillful  upbuilding 
of  demand  for  the  specific  make  of  the  product  in 
question. 

The  producer  or  exporter  of  raw,  staple  or  stand- 
ardized products,  taking  as  a  basis  a  selling  price 
regulated  by  the  law  of  supply  and  demand  must, 
by  his  ability  as  a  judge  of  conditions,  his  skill  as 
a  buyer,  his  efficiency  in  management  and  his  ca- 
pacity to  serve  foreign  importers,  get  into  a  position 
to  supply  the  needed  products  at  a  cost  to  him  that 


126     AMERICAN  METHODS  IN  FOREIGN  TRADE 

allows  for  his  profit.  The  increase  in  his  gains  de- 
pends on  the  amount  of  business  done  (except  for 
the  fortunate  or  unfortunate  turns  of  the  market) 
but  this  volume  of  trade  in  turn  depends  largely 
on  the  increase  of  his  capital  and  prestige  and  the 
development  of  his  own  ability  to  meet  price  com- 
petition rather  than  on  the  augmentation  of  con- 
sumption which  is  regulated  by  the  general  economic 
growth  of  the  communities  which  he  and  his  kind 
supply. 

In  spite  of  this  manifest  fundamental  difference, 
it  is  amazing  to  see  how  often  manufacturers  of 
quality  lines  befuddle  themselves  with  the  opinions 
and  advice  of  men  who  have  marketed  products 
abroad,  perhaps  for  years,  but  know  absolutely 
nothing  about  merchandizing,  domestic  or  foreign. 
This  variation  in  point  of  view  accounts  for  the 
fact  that  two  men,  both  of  whom  speak  with  author- 
ity within  the  limits  of  their  experience,  sometimes 
stand  up  in  foreign  trade  conventions  and  contra- 
dict each  other  from  the  same  platform.  The  ex- 
port brokers  of  kerosene,  copper,  steel,  lard  or  cod- 
fish have,  from  the  sales  development  viewpoint,  no 
more  in  common  with  the  exporters  of  shoes,  type- 
writers, hosiery,  and  machinery  than  have  those  in 
these  lines  in  the  home  market.  The  sooner  this 
is  generally  realized,  the  less  mental  fog  will  char- 
acterize our  export  gatherings. 

It  is  only  the  exporters  of  raw,  staple  or  stand- 
ardized products  that  may  find  it  possible  to  com- 
bine to  advantage  under  the  provisions  of  the  Webb- 
Pomerene  Act.  If  all  or  most  of  the  tanners,  the 
lumbermen,  the  meat  packers,  the  paper  makers,  the 


STANDARDIZED  PRODUCTS  127 

copper  miners,  the  steel  manufacturers  should 
merge  into  one  strong  organization  for  each  line,  it 
is  conceivable  that  each  of  such  coalitions  might 
effect  economies  that  would  enable  them  better  to 
meet  price  competition  or  successfully  thwart  the 
machinations  of  highly  efficient  buying  syndicates 
in  foreign  lands,  for  leather  is  leather,  copper  is 
copper  and  paper  is  paper  and  buyers  care  little 
where  they  come  from  or  who  makes  them. 

Whether  or  not,  however,  it  is  possible  for  the 
lions  to  lie  down  peacefully  together  in  the  foreign 
field  while  continuing  to  roar  at  each  other  at  home, 
would  seem  to  depend  largely  on  the  strength  of 
the  influence  their  trainer  has  over  them.  For  the 
manager  of  such  a  combination  may  find  the  dif- 
ficulty of  preserving  harmony  increasing  with  the 
volume  of  business  done.  How  many  of  the  confed- 
erated producers  outside  of  those  who  dominate 
the  merger  would  become  dissatisfied  with  the 
share  of  business  apportioned  them  and  eventually 
kick  themselves  out  of  it,  no  one  can  predict.  How 
many  small  members  would  object  in  advance  to 
relinquishing  all  control  of  their  foreign  business 
to  such  a  combination  is  equally  difficult  to  estimate, 
but  if  the  Webb-Pomerene  Act  has  any  very  favor- 
able effect  on  our  foreign  trade,  it  will  be  a  not 
unwelcome  surprise  to  many  experienced  observers 
of  human  nature, 


CHAPTER  XXIV 
A  PLEA  FOE  CONSTRUCTIVE  CRITICISM 

Fob  years  our  trade  and  popular  press,  our  busi- 
ness men's  conventions  and  our  banquet  tables  have 
been  infested  with  a  type  of  writer  or  speaker  who 
has  irritated  export  managers  almost  to  the  point 
of  homicidal  mania.  Returning  tourists,  congress- 
men back  from  a  junket,  United  States  consuls  at 
home  on  leave,  diplomats  of  varying  degrees  of 
prominence  and  even  the  heads  of  large  corporations 
who  have  not  the  remotest  idea  how  the  details  of 
their  own  overseas  business  are  handled,  rush  into 
print  or  rise  to  their  feet  without  hesitation  and 
solemnly  tell  American  manufacturers  what  they 
must  not  do  when  they  go  after  foreign  business. 
Seldom  or  never  do  these  mentors  advise  them  what 
to  do  and  how  to  do  it. 

You  gentlemen  who  are  the  honored  heads  of  our 
great  manufacturing  corporations,  we  respect  the 
executive  ability  which  your  possession  of  able 
subordinates  and  the  prosperity  of  your  enterprises 
prove.  On  the  subject  of  general  business  manage- 
ment you  can  speak  with  authority,  but  when  it 
comes  to  the  discussion  of  anything  but  the  general 
aspects  of  foreign  trade,  we  much  prefer  to  hear 
from  the  able  man  or  men  whom  you  so  sagaciously 
selected  to  build  up  an  export  demand  for  your 

128 


A  PLEA  FOR  CONSTRUCTIVE  CRITICISM    129 

goods.  They  know  all  about  liow  it  was  done.  You 
as  a  rule  know  little  or  notliing  in  detail  regarding 
the  methods  they  have  employed. 

You  who  go  abroad  on  business  or  pleasure,  stop 
listening  to  the  thread-bare  tales  of  our  unwilling- 
ness to  supply  what  other  peoples  want,  of  our  in- 
ability to  pack  properly  for  ocean  shipment,  of  the 
brusqueness  and  uncivil  haste  of  our  selling  repre- 
sentatives, of  our  disinclination  to  extend  proper 
credits,  of  our  general  social  and  commercial  cussed- 
ness.  For  they  are  all  lies  of  the  most  damaging 
type  because  they  have  some  slight  basis  in  fact, 
provided  by  the  occurrence  of  the  exceptional. 
When  you  repeat  these  things  you  become  a  carrier 
of  anti-American  propaganda  originated  by  com- 
petitors, usually  by  those  who  in  the  past  were  Ger- 
man, in  sympathy  or  in  antecedents  at  least. 

If  you  must  have  something  to  say  to  business 
men  when  you  return,  do  not  follow  the  line  of  least 
resistance.  Disregard  the  anti-American  propa- 
gandists, find  out  what  local  firms  are  regularly 
doing  business  with  our  manufacturers  and  call  on 
them.  The  cordiality  of  their  reception  of  you  as 
a  compatriot  of  their  best  business  friends  will  per- 
haps astonish  you,  but  you  will  learn  a  great  deal 
and  when  you  return  you  will  preach  the  gospel 
of  American  foreign  trade  methods  as  you  received 
it  from  the  lips  of  its  most  enthusiastic  apostles. 
You  will  tell  what  our  typical  exporting  manufac- 
turers are  doing  and  urge  those  who  are  new  in 
overseas  markets  to  go  and  do  likewise. 

You  bankers  and  public  men  who  address  our 
manufacturers  on  foreign  trade  subjects,  stop  mak- 


130     AMERICAN  METHODS  IN  FOREIGN  TRADE 

ing  yourselves  ridiculous  by  slinging  at  them  the 
same  old  mud  which  your  secretaries  excavate  from 
the  printed  record  of  your  predecessors'  asininities. 
Some  few  years  ago  a  gentleman  newly  but  promi- 
nently connected  with  a  banking  institution  of  in- 
ternational fame  was  invited  to  speak  at  an  export 
gathering  and  made  use  of  this  opportunity  by 
reading  American  manufacturers  a  lecture  on  their 
dishonest  practices  in  foreign  trade.  This  absurd 
and  indiscriminate  attribution  to  all  of  the  dishon- 
orable qualities  of  a  few  of  our  black  sheep  was 
translated  by  alert  German  traders  into  every  com- 
mercial language  and  used  to  convict  our  business 
men,  out  of  their  own  mouths,  of  unreliability  in  in- 
ternational dealing  in  which  mutual  confidence  is  so 
important  a  factor. 

Editors  of  our  popular  and  especially  of  our  daily 
press,  we  realize  that  you  must  do  something  to  raise 
your  reading  columns  above  the  level  of  deadly 
mediocrity,  but  why,  oh  why,  must  you  be  smart  at 
the  expense  of  the  future  of  our  overseas  trade? 
Many  foreign  countries,  especially  the  newer  re- 
publics, lack  a  substantial  middle  class  such  as  we 
have,  but  their  statesmen,  scholars,  scientists  and 
men  of  affairs  compete  favorably  with  our  best  and 
their  worst  hardly  descends  to  the  I.  W.  W.  level. 
Do  you  not  know  that  many  of  the  South  American 
revolutions  you  headline  are  hardly  as  serious  as 
our  large  industrial  strikes'?  Can  you  not  compre- 
hend that  men  who  speak  another  language,  differ 
from  us  in  temperament  and  live  in  other  climes, 
may  nevertheless  be  ardent  patriots,  social  and 
political   idealists   and   intelligent   and   honorable 


A  PLEA  FOR  CONSTRUCTIVE  CRITICISM    131 

gentlemen?  Must  you  forever  follow  tlie  example 
of  our  beloved  O.  Henry,  a  flagrant  offender  against 
the  principles  of  international  amity,  whose  cari- 
catures of  Latin-American  social  and  political  in- 
stitutions will  never  cease  to  amuse  the  unthinking 
or  to  offend  those  to  whom  these  institutions  are 
vital  and  precious  things? 

Surely  you  remember  or  have  heard  of  the  wave 
of  indignation  that  swept  through  our  country  when 
Dickens  rewarded  our  brief  but  heartfelt  hospitality 
by  satirizing  without  mercy  all  things  American. 
You  cannot  have  forgotten  the  resentment,  some- 
times tinged  with  pity  or  amusement,  but  real  re- 
sentment none  the  less,  with  which  we  have  read 
descriptions  of  ourselves  and  our  country  by  Euro- 
pean travelers.  Even  now  we  dislike  to  remind 
ourselves  that  many  misinformed  people  of  the  Old 
World,  still  believe  that  we  of  this  country  live 
chiefly  in  a  wilderness  overrun  with  wild  buffaloes 
and  infested  with  naked  savages  armed  with  toma- 
hawks and  scalping  knives.  Yet  our  press  goes  on 
disseminating  among  our  own  people  just  such  non- 
sense regarding  other  countries. 

Those  of  our  manufacturers  who  are  really  in- 
terested in  the  foreign  field  constitute  the  best  pos- 
sible sources  of  supply  for  overseas  buyers.  Their 
goods  are  right  and  they  serve  their  customers 
better  than  do  the  makers  of  other  nations.  When 
the  rest  learn  to  follow  their  example  we  shall  lead 
all  other  countries  in  the  international  trade  field. 

The  business  men  of  other  lands  who  import  and 
distribute  American  manufactured  goods  are  in  the 
main  highminded  gentlemen  who  are  striving  whole- 


132     AMERICAN  METHODS  IN  FOREIGN  TRADE 

lieartedly  for  the  advancement  of  their  countries. 
Their  customs  and  institutions  may  differ  somewhat 
from  those  we  boast,  but  surely  ours  are  not  so 
perfect  that  we  cannot  afford  to  regard  with  interest 
and  respect  those  that  have  developed  in  another 
environment. 


CHAPTER  XXV 
THE  '^MADE  IN  GERMANY"  IDEA 

The  idea  of  indicating  the  country  of  origin  on 
all  manufactured  articles  was  first  suggested  by  a 
British  law  (Merchandise  Marks  Act,  1887)  which 
prohibited  the  importation  of  ''all  goods  of  foreign 
manufacture  bearing  any  name  or  trademark  being 
or  purporting  to  be  the  name  or  trademark  of  any 
manufacturer,  dealer  or  trader  in  the  United  King- 
dom, unless  such  name  or  mark  is  accompanied  by 
a  definite  indication  of  the  country  in  which  the 
goods  were  produced." 

This  measure  was  designed  to  protect  British  in- 
dustry against  imitation  at  home  and  in  those 
foreign  markets  to  which  imported  goods  might  be 
reshipped  by  commission  houses.  German  products 
which  were  cheap  imitations  of  the  most  popular 
English  lines  were  being  sold  in  constantly  increas- 
ing quantities. 

Smarting  from  this  legislative  rebuke  which  was 
aimed  only  at  piratical  foreign  manufacturers  and 
unprincipled  English  commission  houses,  the  Ger- 
man Government  in  a  spirit  of  guilty  defiance, 
adopted  ''Made  in  Germany"  as  a  permanent 
feature  of  its  maturing  policy  of  nationalizing  its 
foreign  trade. 

To  what  extent  the  appearance  of  this  phrase  in 

133 


134     AMERICAN  METHODS  IN  FOREIGN  TRADE 

English  on  all  German  goods  stimulated  or  handi- 
capped the  growth  of  trade,  it  is  impossible  to  de- 
termine. It  is  certain  that  it  had  both  effects  in 
different  markets  and  on  various  elements  making 
up  these  markets. 

In  this,  as  in  many  of  the  German  trade  policies 
and  devices,  there  are  those  among  us  who  urge 
us  to  adopt  the  same  or  a  similar  plan  in  some  form. 
One  idea  is  that  of  a  National  Trademark  embodied 
in  legislative  measures  which,  taking  the  Sims  Bill 
as  an  example,  provide  for  a  design  to  be  approved 
by  the  President  and  registered  by  the  Commis- 
sioner of  Patents  in  the  name  of  the  United  States 
of  America  without  limitation  of  time  and  covering 
goods  of  all  descriptions.  The  Commissioner  of 
Patents  is  instructed  to  grant  licenses  for  the  use 
of  this  National  Trademark  at  the  request  of  the 
Secretary  of  Commerce,  who  is  empowered  to  pass 
on  applications  for  such  use,  restricting  it  to  makers 
of  lines  that  come  up  to  certain  standards.  Penal- 
ties are  provided  for  the  illegal  employment  of  this 
mark. 

Similar  bills  introduced  at  various  times  in  the 
legislative  bodies  of  England  and  France  have  met 
with  the  almost  unanimous  opposition  of  trade 
associations  and  of  owners  of  widely  known  trade- 
marks. 

All  these  proposed  measures  usually  have  three 
objects  as  follows: 

1.  The  prevention  of  trademark  piracy  and 
the  imitation  of  American  goods  by  German 
and  other  firms  who  have  practiced  it  in  the 
past; 


THE  ''MADE  IN  GERMANY"  IDEA        135 

2.  The  protection  of  American-made  products 
from  foreign  competition  by  so  marking  them 
that  the  buyer  can  discriminate  in  their  favor; 
and 

3.  The  development  of  a  foreign  demand  for 
all  American  goods  by  so  marking  them  that 
all  may  be  benefited  by  the  prestige  that  many 
of  our  products  already  enjoy. 

If  any  such  measure  should  become  law,  it  could 
do  no  good  and  might  do  much  harm.  The  subject 
deserves  the  fullest  possible  discussion  because  a 
presentation  of  the  objections  to  the  plan  will  bring 
out  in  high  relief  many  of  the  fundamental  prin- 
ciples of  American  foreign  trade  policy. 

The  piracy  of  American  trademarks  is  a  well- 
known  fact.  Opportunity  to  indulge  in  this  form 
of  unfair  competition  has  in  the  past  been  offered 
by  the  inadequate  protection  afforded  by  the  laws 
of  many  foreign  countries,  by  the  carelessness  and 
shortsightedness  of  those  trademark  owners  who 
neglected  to  obtain  all  possible  world-wide  protec- 
tion under  existing  laws  and  by  the  failure  of  those 
who  did  take  such  precautions,  to  build  up  a  suffi- 
cient overseas  demand  for  their  goods  to  make  it 
worth  while  to  go  to  the  expense  of  fighting  those 
who  used  their  marks  without  going  through  legal 
formalities. 

The  faulty  laws  of  certain  foreign  countries  will 
offer  no  more  protection  to  a  National  Trademark 
than  to  one  privately  owned  and  registered.  Two 
marks  can  be  pirated  as  easily  as  one  and,  like  the 
two  pigs  under  the  gate,  might  make  more  noise. 
There  is  much  room  for  the  improvement  of  trade- 


136     AMERICAN  METHODS  IN  FOREIGN  TRADE 

mark  protection  throughout  the  world.  This  might 
be  accomplished  by  standardizing  the  provisions  of 
the  laws  of  the  leading  countries  and  promoting  the 
imiform  adoption  of  them  by  means  of  a  Convention 
of  Nations.  When  conditions  are  such  in  any  one 
country  that  a  National  Trademark  can  be  fully 
protected,  then  private  marks  properly  registered 
will  suffice. 

The  remedy  for  the  failure  of  our  manufacturers 
to  protect  themselves  is  a  campaign  of  education 
or,  if  we  are  going  to  paternalize  our  governmental 
institutions,  a  rigid  provision  in  our  laws  that  all 
applicants  for  a  private  trademark  be  required  to 
register  it  within  a  certain  period  of  time  in  as 
many  foreign  countries  as  may  be  prescribed  under 
penalty  of  a  revocation  of  their  right  to  use  it  at 
home.  If  our  manufacturers  in  this  day  and  age, 
after  all  the  years  that  this  subject  has  been  agi- 
tated, have  not  sense  enough  thus  to  protect  their 
future  in  world  markets,  by  all  means  make  them 
do  it.  It  will  take  something  more  than  a  National 
Trademark  to  safeguard  our  foreign  trade  from  this 
form  of  provincialism. 

Where  a  trademark  is  properly  registered  in  a 
foreign  country  and  the  owner  does  not  or 
cannot  accomplish  enough  to  make  it  worth  while 
to  fight  for  its  protection,  the  brand  is  not  worth 
much  to  the  man  who  pirates  it  or  to  the  manu- 
facturer who  owns  it.  Its  theft  does  little  harm 
and  at  least  serves  as  a  convenient  excuse  in  ex- 
plaining the  owner's  failure  to  get  business  in  a 
supposedly  good  market. 

It  is  also  true  that  American  lines  have  been 


THE  "MADE  IN  GERMANY''  IDEA        137 

imitated  in  form  and  general  appearance  by  foreign 
manufacturers  but  the  injury  lias  not  been  as  great 
as  many  would  lead  us  to  believe.  Germany 
sold  imitations,  undoubtedly  in  large  volume,  in 
markets  where  certain  American  lines  were  in  favor 
but  where  our  manufacturers  had  neglected  their 
opportunities.  How  much  of  this  business  would 
otherwise  have  come  to  us  no  one  knows,  but  the 
fact  that  German  traders  were  able  to  accomplish  so 
much  with  an  imitation  shows  that  they  had  in  such 
cases  practically  a  clear  field  free  from  any  effective 
opposition  on  the  part  of  the  makers  of  the  real 
article.  Our  manufacturers  will  never  get  much 
foreign  trade  merely  by  eliminating  the  evil  prac- 
tices of  others.  When  they  stop  whining  and  go 
after  business  hard,  their  imitators  have  as  little 
chance  abroad  as  they  have  in  the  home  market. 

For  instance,  does  anyone  believe  that  Germany 
in  pre-war  days  could  have  made  and  sold  so  many 
*' American"  shoes  if  our  manufacturers  had  been 
on  the  ground  to  make  the  most  of  the  prestige  that 
their  product  enjoyed?  Or  can  it  be  said  with 
assurance  that  if  German  traders  had  not  used 
imitating  tactics,  the  business  they  secured  would 
have  come  to  us?  It  was  not  by  these  methods 
alone  that  they  succeeded.  Factors  involving  price, 
credits,  deliveries,  etc.,  also  entered  into  the  selling 
campaigns. 

Such  trade  as  Germany  secured  largely  by  mis- 
representation was  always  very  vulnerable  to  com- 
petition. The  way  to  beat  the  imitator  is  to  go 
after  him  and  show  him  up  and  if  makers  wait  for 
their  Government  to  do  this  for  them  under  the 


138     AMERICAN  METHODS  IN  FOREIGN  TRADE 

provisions  of  a  National  Trademark  Law  or  any 
other  measure,  they  are  not  destined  to  play  any 
very  striking  role  in  the  foreign  trade  field. 

So  much  for  the  first  object  of  these  measures. 
Let  us  see  what  is  to  be  hoped  for  along  the  line 
of  protection  from  foreign  competiton  in  the  home 
market. 

We  are  too  much  inclined  in  times  of  intense 
national  feeling  to  forget  that  under  normal  condi- 
tions, people  everyAvhere  buy  what  they  do,  not  be- 
cause of  where  it  comes  from  but  because  they  want 
it.  Some,  it  is  true,  always  favor  goods  of  home 
manufacture  for  sentimental  reasons,  but  others  go 
to  the  opposite  extreme  and  show  a  preference  for 
imported  goods.  *'A  prophet  is  not  without  honor 
but  in  his  own  country."  Some  of  us  are  snobs 
and  must  have  what  the  masses  cannot  afford. 
Others  among  us  feel  for  articles  of  home  manu- 
facture the  contempt  that  is  bred  of  familiarity  with 
them  and  their  makers.  Between  these  two  ex- 
tremes lies  the  great  mass  of  consumers  who  ''want 
what  they  want  when  they  want  it." 

If  it  is  desirable  that  all  our  people  be  inoculated 
with  a  prejudice  against  foreign  made  articles  this 
could  be  accomplished  with  more  flexibility  by  re- 
quiring that  imported  articles  be  branded  with  some 
distinguishing  mark.  By  this  method  we  could 
discriminate  against  specific  lines  or  goods  of  one 
origin  only  instead  of  raising  a  barrier  against  the 
whole  outside  world.  This  plan  would  have  the 
added  advantage  of  not  identifying  our  products 
to  anti- American  buyers  abroad. 

There  is,  however,  much  doubt  as  to  the  desira- 


THE  "MADE  IN  GERMANY"  IDEA        139 

bility  of  educating  our  people  to  buy  only  American 
made  goods.  In  advocating  the  protective  tariff 
policies  that  until  recently  found  favor  with  our 
people,  the  leaders  of  this  school  of  thought  un- 
fortunately popularized  the  idea  that  to  export  in 
great  volume  without  importing  anything  spells 
economic  paradise.  Of  course  no  such  condition 
could  exist  without  the  rapid  and  complete  ex- 
haustion of  the  gold  reserves  of  other  countries  and 
resulting  financial  chaos.  Profit  is  not  made  by  the 
sale  of  goods  but  by  the  exchange  of  them  for  other 
products. 

The  sentimental  boycott  of  imported  goods  is 
open  to  another  objection.  We  want  the  merit  of 
reputable  American  lines  to  receive  its  just  reward 
in  foreign  markets.  Can  we  expect  this  to  be  any- 
thing but  reciprocal?  Would  other  countries  fail 
to  retaliate?  Do  we  want  to  bring  about  the  state 
of  commercial  war  that  would  result  from  re- 
taliation? 

Too  much  care  cannot  be  exercised  in  interfering 
with  economic  laws.  Goods  should  sell  on  intrinsic 
merit.  This  is  sound  economics.  To  substitute  for 
this  normal  buying  motive  an  extrinsic  sentimental 
consideration  would  be  extremely  perilous.  It  is 
fortunate  that  the  success  of  any  attempt  to  do 
this  is  very  improbable. 

As  for  the  third  object  of  National  Trademark 
legislative  proposals,  the  development  of  a  foreign 
demand  for  all  our  products,  the  fundamental 
theory  is  faulty.  American  goods  as  such  do  not 
enjoy  any  considerable  degree  of  popularity.  They 
never  will  be  purchased  in  volume  because  of  their 


140     AMERICAN  METHODS  IN  FOREIGN  TRADE 

origin.  As  previously  stated,  we  have  achieved 
some  international  reputation  for  fabricating  skill 
which  is  helpful  in  a  minor  way  but  there  is  not  the 
slightest  doubt  that  any  of  the  great  export  successes 
of  our  manufacturers  could  have  been  made  equally 
well  from  a  European  city,  all  other  factors  such  as 
quality,  design,  selling  methods,  factory  organiza- 
tion and  salesmanship  remaining  the  same.  AVe 
must  get  it  out  of  our  heads  that  we  have  or  ever 
will  have  any  great  good  will  advantage  in  world 
trade  solely  because  we  are  located  in  the  United 
States.  We  should,  as  so  often  reiterated,  depend 
on  the  quality  of  our  products  and  our  salesman- 
ship. These  two  factors  vary  greatly  among  all 
firms  and  are  subject  to  change  with  changing  per- 
sonnel, except  as  standardization  of  producing 
methods  makes  for  uniformity  of  the  first. 

In  the  past  there  have  been  exported  from  the 
United  States  some  of  the  best  and  the  worst  goods 
that  ever  went  into  a  foreign  market.  All  of  our 
manufacturers  are  not  entitled  to  the  good  will 
gained  by  the  former  (in  fact  they  cannot  acquire 
it)  nor  are  they  necessarily  handicapped  by  the  ill- 
will  generated  by  the  latter.  We  want  only  those 
who  deserve  it  to  succeed  in  foreign  trade.  They 
will  without  the  adoption  of  trade  nationalization 
policies,  if  they  but  try.  A  National  Trademark 
would  offer  no  encouragement  to  them  but  it  would 
tend  to  stimulate  the  export  activities  of  makers  of 
inferior  goods. 

A  trademark  is  often  defined  as  a  symbol  in- 
dicating the  origin  of  goods  on  which  it  appears. 
To  Mr.  L.  A.  Janney  we  are  indebted  for  a  more 


THE  ''MADE  IN  GERMANY''  IDEA        141 

exact  definition — a  symbol  indicating  a  common 
origin  and  quality  for  all  goods  on  which  it  is  used. 
In  other  words,  all  articles  bearing  a  given  mark, 
are  supposed  to  have  back  of  them  the  individual 
responsibility  of  the  same  maker  or  merchant. 

A  trademark  is  therefore  not  only  designed  to 
protect  its  owner  in  the  enjoyment  of  his  good  will 
but  is  also  a  guarantee  to  the  consumer  against  de- 
ception. The  latter  function  is  in  the  eyes  of  the 
law  equally  if  not  more  important. 

A  National  Trademark  applied  to  goods  of 
many  kinds  and  origins  would  therefore  not  be 
a  trademark  at  all.  It  would  not  indicate  common 
origin  and  quality  and  thus  be  a  guarantee  to  the 
public.  For  this  reason,  it  is  doubtful  if  it  could 
be  protected  under  existing  laws  and  the  amend- 
ments that  would  be  necessary  to  make  it  possible 
to  prevent  its  unsanctioned  use  would  weaken  if 
not  destroy  the  whole  foundation  on  which  existing 
trademark  legislation  rests.  Furthermore,  the  idea 
of  a  national  government  becoming  a  trademark 
owner  and  the  theory  that  by  license  the  right  can 
be  acquired  to  use  a  trademark  on  goods  over 
whose  manufacture  the  owner  of  the  mark  can  ex- 
ercise no  adequate  control,  are  innovations,  to  put 
it  mildly. 

So  much  for  the  negative  aspect — the  uselessness 
— of  the  proposal  embodied  in  such  measures.  Let 
us  see  what  positive  harm  might  result  if  a  National 
Trademark  came  into  use  with  or  without  protec- 
tion throughout  the  world. 

To  the  individual,  a  trademark  stands  for  just 
what  his  experience  has  been  with  the  article  on 


142     AMERICAN  METHODS  IN  FOREIGN  TRADE 

which  it  is  used.  Its  value  to  its  owner  depends, 
not  on  Avhat  it  means  to  those  wlio  like  the  product 
best,  but  on  the  common  run  of  the  experience  of 
all.  Thus  the  power  of  a  trademark  to  attribute 
excellence  is  in  the  last  analysis  determined  by  the 
average  quality  of  the  line  on  which  it  is  used  and 
this  average  is  lowered  by  any  disproportionate  in- 
crease in  the  sale  of  inferior  goods  bearing  the 
brand. 

Many  American  manufacturers  have  a  high 
reputation  throughout  the  world  for  quality  of 
product.  If  they  use,  in  addition  to  their  private 
brands,  a  National  Trademark  over  whose  general 
employment  they  individually  have  no  control,  they 
to  some  extent  identify  their  products  with  all 
others  so  labeled  and  are  therefore  damaged  in  the 
eyes  of  the  public  by  every  maker  of  inferior  goods 
who  uses  the  same  symbol,  and  the  consumer  at  home 
and  abroad  is  to  some  extent  deprived  of  the  full 
measure  of  protection  to  which  he  is  legally  en- 
titled. It  is  argued  that  the  simultaneous  use  of 
private  marks  would  prevent  this  but  who  can  tell 
which  of  the  two  will  catch  the  buyer's  eye?  If 
a  National  Trademark  is  to  be  of  any  value  it  must 
be  conspicuous  and  the  more  striking  it  is,  the 
greater  the  possibility  of  harm  in  such  cases. 

The  gentleman  who  drafted  the  Sims  Bill  is  said 
to  have  declared  that  a  National  Trademark  should 
only  be  expected  to  indicate  the  country  of  origin 
and  that  any  attempt  to  make  it  do  more  would 
result  in  failure.  The  difficulty  is  that  no  one  can 
make  a  trademark  do  anything  to  order.  Its  great 
value  lies  in  the  fact  that,  refusing  to  act  as  its 


THE  ''MADE  IN  GERMANY''  IDEA        143 

owner  may  desire,  it  goes  steadily  on  performing 
its  one  great  service,  that  of  indicating  to  the 
buyer  the  origin  and  quality  of  something  he  has 
purchased  before  or  that  has  made  a  favorable  im- 
pression on  him  through  advertising  and  other 
merchandizing  aids  or  by  its  reputation  among  his 
friends  and  acquaintances.  No  one  can  possibly 
know  what  a  National  Trademark  widely  used  on 
goods  of  all  kinds  may  one  day  come  to  stand  for. 
Certain  it  is  that  he  who  uses  it  runs  the  risk, 
through  no  fault  of  his  own,  of  having  it  meet  the 
eye  of  those  to  whom  it  has  an  undesirable  sig- 
nificance. 

Making  the  use  of  a  National  Trademark  volun- 
tary does  not  help  much  for  the  manufacturer  who 
elects  not  to  use  it  is  constantly  subject  to  mis- 
representation. His  competitors  then  could  and 
would  claim  that  his  goods  were  not  up  to  required 
standards. 

To  meet  these  objections  it  is  proposed  that 
licenses  should  only  be  issued  to  makers  of  lines 
that  come  up  to  certain  specifications.  To  this  the 
American  Chamber  of  Commerce  in  London  in  a 
protest  said  that  ''the  restriction  of  the  mark  to 
strictly  standardized  goods  is  impractical  and  im- 
possible of  efficient  application."  How  and  by 
whom  are  these  standards  to  be  established?  What 
steps  can  be  taken  to  insure  that  applicants  once 
accepted  would  maintain  them?  Surely  a  small 
army  of  expert  examiners  backed  up  by  another  of 
inspectors  would  be  required  thus  to  protect  a  Na- 
tional Trademark  from  use  by  those  not  entitled 
to  it. 


144     AMERICAN  METHODS  IN  FOREIGN  TRADE 

Then,  too,  whatever  standards  are  established, 
they  cannot  be  the  highest  for  too  many  would  then 
be  excluded.  If  they  are  not  the  highest  the  un- 
fairness to  those  who  maintain  superior  standards 
still  inheres. 

It  is  hard  to  make  any  adequate  statement  of  the 
difficulty  of  the  task  such  a  law  would  impose  on 
the  Secretary  of  Commerce.  Every  manufacturer 
thinks  his  goods  are  up  to  standard  and  would  not 
readily  give  up  an  attempt  to  acquire  the  right  to 
use  the  mark.  Innumerable  disputes  and  accusa- 
tions of  favoritism  would  result.  The  impossibility 
of  performing  the  task  to  anyone's  entire  satisfac- 
tion would  speedily  lead  to  the  admission  of  all  to 
the  supposedly  distinguished  company  of  National 
Trademark  users.  It  is  no  disparagement  of  the 
ability  of  Secretaries  of  Commerce  past,  present  or 
to  come,  to  say  that  their  responsibilities  under  such 
a  law  would  be  too  great. 

It  has  even  been  suggested  that  owners  of  private 
brands  might  substitute  the  National  Trademark 
for  them.  In  view  of  the  foregoing,  this  is  too  silly 
to  deserve  more  than  passing  mention  as  showing 
how  far  afield  the  supporters  of  this  idea  have  gone 
in  their  attempts  to  bolster  themselves  up  in  their 
position. 

The  employment  of  a  common  mark  on  competing 
lines  would  greatly  facilitate  substitution.  Every 
leading  maker  aims  to  distinguish  his  goods  from 
those  of  his  competitors  and  does  not  welcome  the 
idea  of  using  a  trademark  that  can  be  referred  to 
as  an  evidence  that  other  articles  than  his  are  really 
the  same  though  put  up  differently  for  reasons  that 


THE  "MADE  IN  GERMANY"  IDEA        145 

are  confidential.  The  substitution  evil  is  serious 
enough  as  it  is. 

The  Irish  trademark  is  frequently  cited  as  proof 
of  the  practicability  and  desirability  of  this  move- 
ment. Some  enthusiasts  attribute  to  it  the  success 
of  the  products  of  the  Emerald  Isle  in  foreign 
markets.  In  the  absence  of  any  tangible  evidence, 
most  experienced  exporters  will  prefer  to  believe 
that  Irish  goods  are  in  demand  because  they  are 
what  they  are  and  because  the  makers  of  them  know 
how  to  sell  them. 

Opponents  of  these  measures  have  been  accused, 
even  by  those  in  high  places,  of  a  selfish  unwilling- 
ness to  use  their  prestige  in  foreign  markets  built 
up  by  years  of  hard  and  expensive  work,  to  help 
others  enter  the  field.  There  may  be  some  slight 
basis  for  this  where  direct  competition  is  con- 
cerned. If  so,  what  of  it?  Is  there  anything  repre- 
hensible in  this?  Are  we  or  are  we  not  a  nation 
of  competing  individuals  and  if  we  are,  must  we, 
competing  at  home  adopt  another  policy  abroad  in 
the  name  of  patriotism?  Must  we  at  the  behest  of 
those  who  advocate  the  national  exploitation  of 
foreign  markets,  abandon  the  individualistic  meth- 
ods that  we  have  found  so  successful?  Foreign 
trade  is  no  more  a  national  matter  than  is  domestic 
commerce.  Again,  it  must  be  repeated,  we  do  not 
sell  abroad  as  a  nation  but  as  individuals.  The 
truly  patriotic  American  manufacturer  is  he  who 
earns  the  confidence  of  his  consumers  at  home  and 
abroad  and  then  protects  them  all  equally. 

Our  exporting  manufacturers  are  not  averse  to 


146     AMERICAN  METHODS  IN  FOREIGN   TRADE 

extending  a  helping  hand  to  the  beginner  in  foreign 
trade.  In  fact  the  spirit  of  co-operation  that  they 
show  in  assisting  others  to  solve  their  problems  and 
in  communicating  facts  regarding  their  experience 
with  foreign  buyers  is  extremely  praiseworthy. 
They  do,  however,  object  decidedly  and  justly  to 
inflicting  needless  damage  on  their  consumers,  their 
distributors  and  themselves  for  the  sake  of  a 
theoretical  benefit  to  all  other  manufacturers,  de- 
serving and  undeserving  alike. 

This  whole  movement  is  a  piece  of  patriotic  senti- 
mentalism.  It  is  not  based  on  an  acquaintance  with 
the  real  factors  in  foreign  trade.  It  cannot  do  any 
good  and  may  do  much  harm  unless  some  way  is 
found  to  curb  this  phase  of  the  activities  of  our 
theoretical  exporters  who  attract  the  unthinking  and 
the  inexperienced  to  the  support  of  their  plans  for 
conquering  world  markets  by  Act  of  Congress. 


CHAPTER  XXVI 

A  SUGGESTION  TO   THE  DEPARTMENT  OF 
COMMERCE 

Judging  by  what  is  said  in  export  gatherings  by- 
local  representatives  of  the  Bureau  of  Foreign  and 
Domestic  Commerce,  which  is  a  branch  of  the  De- 
partment of  Commerce,  there  is  a  feeling  that 
American  manufacturers  either  do  not  fully  under- 
stand or  do  not  quite  appreciate  the  work  the 
Bureau  has  been  doing  in  recent  years.  On  every 
possible  occasion  laudable  attempts  have  been  made 
to  remedy  this  supposed  situation.  As  a  matter  of 
fact  those  of  our  manufacturers  who  have  made  a 
start  in  direct  exporting,  do  appreciate  and  use  the 
help  that  the  Bureau  offers.  Those  who  as  yet  have 
no  export  selling  policy  and  do  not  know  how  to 
do  business  direct  in  foreign  markets,  also  appreci- 
ate the  Bureau's  work  but  remain  inactive. 

The  reason  is  this:  The  best  that  the  Bureau 
has  thus  far  been  able  to  do  is  to  provide  our  ex- 
porters with  tools.  It  has  not  been  able  to  show 
the  inexperienced  and  unskilled  how  to  use  them. 
Most  of  our  manufacturers  look  at  the  attractive  dis- 
play in  the  show  windows  of  the  Bureau's  branch 
offices  with  sincere  regret  at  their  inability  to  become 
patrons  but  with  a  fear  that  if  they  attempt  it,  they 
will  cut  themselves  and  bleed  to  death.    It  is  cer- 

147 


148     AMERICAN  METHODS  IN  FOREIGN  TRADE 

tainly  no  reflection  on  the  quality  of  these  tools  to 
say  that  many  of  those  who  might  try  to  use  them 
would  at  least  run  a  chance  of  maiming  themselves 
badly. 

"  The  remedy  for  this  is  very  simple  on  paper.  In 
practice  it  might  prove  more  complex  and  difficult, 
but  the  idea  oifers  so  much  food  for  thought  to  both 
Government  officials  and  manufacturers  that  it  is 
worth  while  to  consider  it  carefully. 

The  Bureau  of  Commerce  might  bridge  the  gap 
between  its  excellent  service  and  the  manufacturer 's 
inability  to  use  it  by  finding  a  man  who  has  the 
confidence  and  respect  of  the  majority  of  our  export 
managers  and  who  is  capable  of  making  a  thorough 
study  of  any  manufacturer's  line,  policy  and  in- 
ternal situation,  and  then  from  his  own  experience 
or  by  consultation  with  export  managers  of  his  ac- 
quaintance, show  such  a  prospective  exporter  how 
the  things  he  is  doing  in  the  home  market  can,  with 
slight  modifications,  be  done  in  foreign  trade — how, 
in  other  w^ords,  he,  without  any  radical  departure 
from  his  established  policies,  can  direct  the  selling 
genius  that  has  made  him  successful  at  home,  into 
a  wider  field. 

Such  a  man  when  found  should  be  given  the 
appropriation  and  the  power  that  are  necessary  to 
enable  him  to  multiply  himself  through  a  staff  of 
carefully  selected  office  subordinates  and  field 
workers  so  that  the  service  could  be  extended  to 
cover  all  industrial  regions. 

There  is  no  difficulty  about  this  plan  so  far  as 
manufacturers  are  concerned.  They  would  welcome 
it  and  would  probably  be  glad  to  pay  a  fee  more 


A  SUGGESTION  149 

than  commensurate  with  the  cost  of  the  service,  if 
any  such  arrangement  with  a  Govermnent  bureau 
were  possible.  The  light  it  would  shed  where  all 
is  now  darkness  is  surely  needed  and  they  know  it. 

It  would  be  easy  to  secure  the  assistance  of 
export  managers.  They  are  the  most  willing  co- 
operators  that  we  have  in  our  business  life.  On 
their  ability  and  readiness  to  help  others  depend 
the  successes  they  are  making.  They  believe  in  sound 
and  constructive  team  work  and  would  be  among 
the  first  to  endorse  and  actively  back  up  such  a 
plan  if  they  could  see  any  glimmer  of  promise  that 
it  might  be  carried  out  effectively. 

The  difficulties  are  these: 

First,  it  would  not  be  easy  to  find  a  man  who 
has  the  ability  and  versatility  to  undertake  such  a 
work  with  fair  prospects  of  success.  Men  of  this 
type  are  scarce.  They  are  most  of  them  firmly  tied 
up  to  private  interests. 

Second,  it  would  be  hard  to  be  sure  that  the  man, 
once  discovered,  was  the  right  one.  A  wide  ac- 
quaintance with  Senators  and  Representatives 
would  scarcely  prove  it.  Probably  the  best  test 
would  be  his  standing  with  export  managers. 

Third,  if  such  a  man  were  located  and  positively 
identified  as  the  right  one,  the  Bureau  would  prob- 
ably not  be  allowed  by  the  Congress  to  pay  him 
what  he  is  worth  to  private  business  or  provide  him 
with  sufficient  funds  to  do  his  work.  Once  found, 
he  would  be  worth  to  our  Government  any  figure 
in  reason  that  it  might  cost  to  secure  his  services. 

Fourth,  the  red  tape  of  official  Washington  and 
the  requirements  of  the  Civil  Service  Eegulations 


150     AMERICAN  METHODS  IN  FOREIGN  TRADE 

might  so  hamper  him  in  the  building  up  of  his 
organization  and  the  suppljdng  of  efficient  service 
that  in  spite  of  his  ability  and  any  Congressional 
generosity  as  to  his  budget  and  his  own  compensa- 
tion, he  might  fail  in  his  undertaking. 

If  the  Department  of  Commerce  would  do  some- 
thing really  big  for  the  foreign  trade  of  the  United 
States,  it  should  find  some  way  to  carry  out  the 
above  plan  or  some  modification  of  it.  We  have 
no  weakness  in  foreign  trade  except  this — the  vast 
majority  of  our  manufacturers  have  no  export 
policy.  They  have  the  goods,  the  markets  are  there 
and  every  necessary  mechanical  facility  is  ready  to 
their  hand.  All  they  need  to  be  shown  is  how  to 
sell  their  particular  line  abroad. 

And  while  the  Department  of  Commerce  is  trying 
to  solve  this  problem,  may  it  not  overlook  the  im- 
portance of  dissuading  our  lawmakers  from  fooling 
with  foreign  trade  legislative  proposals  which,  in 
the  opinion  of  the  vast  majority  of  export  managers, 
are  so  full  of  dynamite  that,  if  not  safely  stored  in 
obscure,  well-padded  pigeonholes,  they  may  break 
loose  and  tear  holes  in  the  structure  of  our  existing 
overseas  commerce  that  cannot  be  repaired  in  a 
generation. 


CHAPTEE  XXVII 
AMEEICAN  BANKS  ABROAD 

Students  of  foreign  trade  who  during  pre-war 
years  followed  the  arguments  of  advocates  of  the 
establishment  of  American  banks  abroad,  without 
doubt  gathered  the  impression  that  the  lack  of 
such  institutions  was  a  serious  handicap  to  our 
exporters.  As  a  matter  of  fact,  those  who  have 
been  engaged  in  foreign  merchandizing  have  sel- 
dom or  never  had  the  slightest  difficulty  in  financing 
the  trade  they  secured,  through  English,  Spanish, 
French,  Italian  or  German  branch  banks  or  through 
local  institutions  in  the  different  countries  where 
they  did  business. 

Insofar  as  they  could  do  so  without  serious  detri- 
ment to  their  own  standing,  some  of  these  banks, 
especially  those  under  German  control,  sometimes 
placed  obstacles  in  the  way  of  American  exporters 
or  of  local  importers  who  desired  to  buy  our  prod- 
ucts, but  the  extent  to  which  such  practices  prevailed 
was  limited  by  the  obvious  certainty  that  such  a 
course  would  have  so  undermined  the  prestige  of 
a  bank  that  persistently  followed  it,  as  to  handicap 
it  very  seriously  in  competition. 

The  indulgence  of  German  banks  in  such  viola- 
tions of  good  business  principles  had  in  1914  made 
their  situations  precarious  in  many  foreign  markets 
for,  having  lost  the  confidence  of  many  of  the  best 

151 


152     AMERICAN  METHODS  IN  FOREIGN  TRADE 

business  men  of  their  communities,  they  were  being 
forced  more  and  more  to  confine  their  operations 
to  the  less  desirable  factors  in  local  trade. 

On  the  whole,  however,  the  statement  that  Ameri- 
can manufacturers,  previous  to  1914,  experienced  no 
serious  difficulty  in  financing  their  legitimate 
transactions  in  foreign  markets  will  stand  the  test 
of  careful  investigation.  Why  then  the  agitation 
for  American  banks  ? 

It  is  doubtful  if  any  great  trade  advantage  would 
have  resulted,  if  we  had  had  American  branch  banks 
in  foreign  countries  previous  to  the  outbreak  of  the 
war.  Banking  is  a  highly  competitive  service,  the 
establishment  of  which  seldom  if  ever  precedes  the 
existence  of  a  sufficient  volume  of  business  to  enable 
it  to  show  a  profit.  Banks  do  not  sell  goods.  They 
can  at  best  do  little  more  than  facilitate  the  ex- 
change of  products  that  results  from  the  buying  and 
selling  activities  of  manufacturers  and  traders. 
.  That  ample  facilities  were  in  existence  for  finan- 
cing pre-war  trade  is  best  evidenced  by  the  fact  that 
capital  did  not  flow  into  international  banking 
channels.  In  fact,  in  few  foreign  countries  was  there 
any  noteworthy  dearth  of  either  banking  or  trading 
capital.  In  many  of  them  investment  capital  for 
the  development  of  natural  resources  and  private 
enterprises  of  various  kinds  was  badly  needed,  but 
no  one  would  seriously  contend  that  American  com- 
mercial bankers  would  have  attempted  to  supply  this 
lack  as  did  the  more  speculative  Germans,  backed  as 
they  were  by  the  resources  of  their  government. 

There  is  a  distinct  tendency  on  the  part  of  our 
manufacturers    to    regard    the    establishment    of 


AMERICAN  BANKS  ABROAD  153 

American  banks  abroad  as  a  sort  of  assurance  that 
they  will  have  a  great  foreign  trade.  As  a  matter 
of  fact  it  means  nothing  of  the  kind.  Their  trade 
and  the  very  continuance  of  the  existence  of  such 
banks  will  depend  almost  altogether  on  the  selling 
efforts  made  by  each  American  maker  of  manufac- 
tured goods  and  the  development  in  this  country  of 
a  market  or  clearing  house  for  the  products  of  other 
lands.  Our  foreign  branch  banks  give  promise  of 
supplying  an  excellent  service  to  those  who  put 
themselves  in  a  position  to  use  it  but  more  than  this 
cannot  fairly  be  expected  of  them. 

American  banks  abroad,  while  they  cannot  make 
sales  for  our  manufacturers,  should  accomplish 
several  very  desirable  objects.  They  should  by  ex- 
tensions of  credit  to  local  firms  greatly  increase  the 
usefulness  of  existing  trading  capital.  They  should 
facilitate  the  permanent  investment  in  local  enter- 
prises, of  American  capital  which,  in  the  future, 
must  go  abroad  for  opportunities.  They  should 
serve  as  centers  of  Americanism  in  each  foreign 
community,  spreading  abroad  our  ideas  of  good 
business  and  making  it  easier  for  our  manufacturers 
and  exporters  to  establish  their  standing  with  local 
merchants. 

American  branch  banks  abroad  should  also  ac- 
complish much  in  gathering  specific  information  and 
passing  it  on  to  our  manufacturers  in  readily 
utilizable  form.  This  information  falls  into  two 
classes,  i.e.,  data  regarding  special  trade  opportuni- 
ties and  reports  on  the  standing  of  foreign  buyers. 
Considerable  progress  is  being  made  along  these 
lines. 


154     AMERICAN  METHODS  IN  FOREIGN  TRADE 

Wliat  perhaps  constitutes  the  greatest  incidental 
help  that  our  foreign  banks  will  give  us  is  that  in- 
tangible but  none  the  less  real  service  of  promoting 
among  business  men  everywhere  an  acquaintance 
with  the  United  States  and  its  real  political,  com- 
mercial and  social  aims.  Unfortunately  w^e  are 
misunderstood  in  many  countries.  Our  European 
competitors,  particularly  those  of  Germany,  have 
devoted  more  and  more  attention  to  misrepresenting 
our  diplomatic  and  trade  policies  as  we  have  made 
greater  progress  year  by  year  in  each  market,  and 
their  assertions  have  unfortunately  often  been 
corroborated  by  the  eagle-screaming  emanations  of 
some  of  our  loud-mouthed  traveling  Americans  w^ho 
are  in  no  way  representative  of  the  United  States. 

Some  of  our  press  have  also  lent  color  to  our 
competitors'  misrepresentations,  and  to  make  mat- 
ters worse,  the  lack  of  adequate  passenger  steam- 
ship service  between  our  ports  and  those  of  many 
foreign  countries  has  prevented  anything  like  the 
great  annual  pilgrimage  of  business  men  to  Europe 
from  contributing  its  part  to  the  improvement  of 
our  international  relations.  In  Australasia,  the 
Far  East  and  South  America  w^e  are  not  generally 
known  as  we  really  are.  Our  exporting  manufac- 
turers have  done  much  to  correct  mistaken  impres- 
sions but  our  foreign  banks,  with  their  more  general 
contact  w^ith  the  life  of  each  community,  should  ac- 
complish even  more. 

To  accomplish  all  this  American  bankers  who 
have  ventured  into  the  overseas  field  need  the  co- 
operation of  our  exporters  but,  on  the  other  hand, 
they  must  deserve  it.    They  should  not  depend  on 


AMERICAN  BANKS  ABROAD  155 

sentiment  to  divert  business  originating  in  this 
country  to  the  new  channels  that  they  have  estab- 
lished. Their  foreign  exchange  managers  must  not, 
for  the  sake  of  the  immediate  showing  their  depart- 
ments can  make,  take  advantage  of  the  ignorance  of 
our  fledgeling  exporters.  Constant  efforts  must  be 
made  to  serve  the  overseas  interests  of  our  manufac- 
turers in  every  legitimate  way. 

It  is  not  necessary  or  even  desirable  that  our 
bankers  attempt  to  go  to  the  extremes  that  those  of 
Germany  have  gone  in  the  past.  We  want  the  best 
service  obtainable  with  the  least  possible  cost  to  us 
and  to  our  foreign  customers.  We  do  not  desire 
that  those  of  our  competitors  who  find  it  advan- 
tageous to  use  the  foreign  branches  of  American 
banks,  should  be  subjected  to  the  slightest  dis- 
crimination. We  do  not  have  to  resort  to  such 
methods  to  sell  our  products  and  if  we  did,  we  should 
feel  there  was  something  wrong  with  us  and  that 
we  were  on  very  unsafe  ground. 


CHAPTER  XXVIII 

FOREIGN  INVESTMENTS  AND  EXPORT 
TRADE 

There  is  in  the  United  States  a  school  of  foreign 
trade  thought  that  believes  that  without  the  invest- 
ment of  American  capital  in  local  enterprises 
throughout  the  world,  we  can  never  accomplish 
much  in  world  markets.  This  question  is  worthy  of 
some  discussion  because  our  past  failure  or  rather 
inability  to  follow  the  lead  of  England  and  Germany 
in  this  respect  has  frequently  cropped  out  as  one 
of  the  excuses  given  by  our  manufacturers  for  not 
making  an  effort  to  get  overseas  business,  and  be- 
cause many  if  not  most  of  those  who  have  been 
advocating  such  investments  are  doing  so  on  an 
unsound  basis. 

Here  again  the  apparent  success  of  the  German 
system  of  getting  a  strangle  hold  on  foreign  en- 
terprises and  then  squeezing  business  out  of  them 
for  the  benefit  of  the  homeland  has  corrupted  some 
of  us  mentally  or  morally. 

The  idea  seems  to  be  that,  now  that  we  are  a  great 
creditor  nation,  our  bankers  will,  when  they  supply 
the  money  to  build  a  waterworks  system  for  some 
foreign  city,  either  specify  in  advance  or  later  in- 
sist that  American-made  materials  and  supplies  are 
to  be  used  throughout.    Thus,  it  is  contended,  our 

156 


FOREIGN  INVESTMENTS  157 

makers  of  cement,  pipe,  valves,  etc.,  will  benefit 
from  a  great  increase  in  the  '^ demand"  for  their 
products.  The  same  reasoning  applies  to  the  build- 
ing of  railroads,  hydro-electric  plants  and  other 
similar  enterprises. 

''Demand"  is  scarcely  the  word  to  describe  what 
may  sometimes  prove  to  be  the  unwilling  but  en- 
forced acceptance  of  a  necessary  evil.  Let  us  sup- 
pose for  the  sake  of  argument  that  the  best  possible 
valves  for  a  waterworks  system  are  made  in  Eng- 
land or  that,  owing  to  a  great  demand  in  other  parts 
of  the  world,  the  best  American  valve  makers  are 
unable  to  accept  new  orders.  Is  it  to  our  real  in- 
terest to  have  inferior  American  valves  forced 
on  those  who  in  the  last  analysis  must  pay  the  bill 
when  in  all  justice  they  should  be  allowed  to  pur- 
chase the  goods  that  are  best  for  them? 

Let  us  use  a  homely  illustration.  Assume  that 
you  are  a  retail  merchant  in  need  of  financial 
assistance  and  go  to  a  bank  president  who  after 
looking  over  your  statement  admits  that  you  are 
entitled  to  accommodation  and  agrees  to  extend  it 
on  condition  that  you  discontinue  certain  lines  of 
merchandise  and  substitute  for  them  the  goods  made 
by  certain  depositors  of  the  bank  or  by  friends  of 
its  president.  If  you  are  a  good  business  man,  if 
your  need  is  not  too  pressing  and  if  there  is  hope 
of  getting  the  money  on  a  cleaner  basis  elsewhere, 
you  would  turn  this  down.  Suppose,  however,  that 
you  were  in  a  position  where  you  had  to  accept  this 
proposition  or  nothing,  or  that,  after  the  banker 
had  extended  the  asked-for  assistance  with  no 
strings  to  it  he  took  advantage  of  your  position  to 


158     AMERICAN  METHODS  IN  FOREIGN  TRADE 

force  you  to  accept  the  further  conditions  named. 
Would  it  be  good  business  for  him  or  for  his  de- 
positors and  friends  whose  products  would  thus  be 
thrust  upon  you?  You  w^ould  then  have  to  carry 
the  loan  w^ithout  the  privilege  of  using  your  own  best 
judgment  in  the  management  of  your  business. 
Would  you  feel  that  you  had  been  treated  with  com- 
mon decency?  And  what  would  you  do  to  that 
banker  and  his  precious  crew  of  ''squeeze"  artists 
if  you  ever  got  back  on  your  feet  and  opportunity 
offered? 

Do  you,  the  business  executives  of  the  United 
States  of  America,  w^ant  to  see  our  international 
bankers  do  exactly  the  same  thing  to  foreign  com- 
munities who  need  our  capital?  Do  you  think  it 
would  be  good  business  for  the  bankers  or  for  you? 
Do  you  need  any  such  help  to  sell  your  products? 
Or  do  you  want  those  who  hold  the  purse  strings 
to  say  something  like  this? 

''We  have  looked  into  your  project  and  find  it 
sound.  Owing  to  a  combination  of  circumstances 
we  have  the  money  to  finance  it  and  will  let  you 
have  it  under  certain  fair  conditions  and  at  the 
usual  rate  of  interest.  The  report  of  our  experts 
show^s  that  you  are  entitled  to  this  and  you  will  get 
it.    So  much  for  that. 

"It  has  occurred  to  us,  however,  that  in  carrying 
out  your  project  you  will  use  a  great  many  things 
that  are  made  in  the  United  States  as  well  as  other 
countries.  We  shall  appreciate  it  if  you  will  give 
our  manufacturers  an  opportunity  to  demonstrate 
what  they  have  to  offer.  You  understand,  of  course, 
that  as  your  financial  backers,  we  are  desirous  first 


FOREIGN  INVESTMENTS  159 

of  all  that  you  make  a  success  of  your  project.  "We 
do  not  want  the  fact  that  we  are  Americans  to 
influence  you  into  buying  anything  in  our  country 
that  you  would  not  otherwise  purchase  on  its 
merits.  You  are  paying  us  what  our  money  is  worth, 
we  are  satisfied  with  the  security  and,  rather  than 
handicap  you  in  the  development  of  your  plans,  we 
prefer  to  leave  you  to  work  out  your  salvation 
unhampered,  because  the  success  of  your  operations 
and  those  of  others  like  you  will  in  time  lead  to 
the  development  of  a  sound  prosperity  throughout 
the  whole  community.  Many  American  goods  are 
now  sold  here  on  their  merits.  More  will  be  sold 
when  the  per  capita  hujmg  power  of  your  country 
increases.  Our  general  commercial  relations  will, 
we  hope,  become  constantly  closer  and  mutually 
more  advantageous,  but  that  ^\ill  be  a  legitimate  re- 
sult of  our  co-operation  with  you  and  others  who 
need  our  capital." 

Is  it  necessary  to  ask  any  American  business 
executive  which  of  these  attitudes  he  favors!  Can 
we  ever  achieve  anything  by  "squeeze"  methods  that 
will  even  approximate  what  we  can  accomplish  by 
being  straight-forward  business  men  in  all  our  deal- 
ings with  other  peoples'?  If  we  have  capital  to 
export,  we  must  find  foreign  investments,  but  re- 
gardless of  what  others  may  or  may  not  do,  let  us 
not  assume  that  after  exacting  a  fair  price  for  what 
we  have,  we  can  force  other  advantages,  just  be- 
cause what  we  happen  to  have  is  money.  Let  us  be 
leaders,  not  servile  imitators  of  others. 

Let  us  therefore  not  only  not  encourage  our  in- 
vestment bankers  to  adopt  the  unfair  methods  that 


160     AMERICAN  METHODS  IN  FOREIGN  TRADE 

have  been  all  too  common  in  international  financing, 
but  let  us  go  further  and  positively  discourage,  as 
inimical  to  our  best  interests,  any  such  tendencies 
that  may  crop  out  in  them.  Let  us  as  a  people  take 
the  stand  that  we  want  first  to  help  others  to  the 
prosperity  that  we  enjoy  because  it  will  make  the 
world  a  better  place  and  because  this  will  in  turn 
benefit  those  of  us  whose  goods  and  service  entitle 
us  to  a  deserved  recognition  in  world  markets. 

In  spite  of  the  universal  resentment  that  was 
the  ruin  of  Germany — a  dislike  that  grew  out  of 
her  business  methods  as  well  as  the  conduct  of  her 
military  campaign — in  spite  of  our  more  or  less 
general  recognition  that  her  downfall  was  primarily 
due  to  her  commercial  arrogance  and  brutality,  it 
is  remarkable  how  many  there  are  among  us  whose 
minds  have  been  tainted  with  the  poison  that  warped 
the  intellects  of  the  Kaiser's  subjects. 

A  word  to  American  manufacturers.  Do  not  wait 
for  heavy  investments  of  American  capital  to  open 
up  foreign  markets  for  you.  They  are  now  ready 
and  waiting  if  you  make  good  products  that  are  in 
general  use.  Their  possibilities  will  increase  with 
the  development  of  their  natural  resources  but  those 
who  are  on  the  ground  and  working  through  estab- 
lished distributors  will  get  the  greatest  benefit  from 
such  growth. 

If  your  products  are  such  that  large  foreign  de- 
mand for  them  depends  chiefly  on  the  higher  de- 
velopment of  the  social,  commercial  and  industrial 
life  of  overseas  markets,  and  you  can  demonstrate 
their  worth,  start  at  once  to  get  a  foothold  with- 
out waiting  for   the   intrigues    of   capital   to   get 


FOREIGN  INVESTMENTS  161 

business  for  you.  A  new  era  has  begun — an 
era  in  which  those  who  need  capital  will  get 
it  solely  because  of  that  need  and  because  they 
deserve  it.  Investment  will  be  investment  and  not 
loan-shark  exploitation.  Those  who  get  our  money 
will  be  left  free  to  use  it  to  the  greatest  possible 
advantage.  Whatever  you  make,  you  will  benefit  to 
exactly  the  extent  that  you  are  in  a  position  to 
demonstrate  the  value  of  your  products.  We 
have  shown  the  world  that  we  know  how  to  sell 
goods  fairly  everywhere.  Our  investment  bankers 
can  never  go  out  into  the  atmosphere  of  American- 
ism that  characterizes  our  international  trading 
operations  and  succeed  by  acting  like  anything  else 
but  believers  in  the  inalienable  rights  of  all  peoples. 


CHAPTER  XXIX 
THE  AMERICAN  MERCHANT  MARINE 

Ocean  transportation  is  a  commodity  and  those 
who  supply  it  must,  to  make  a  success  of  their  busi- 
ness, meet  price  competition,  subject  to  the  law  of 
supply  and  demand,  or  render  a  distinctive  quality 
service  and  get  what  it  is  worth  regardless  of  what 
someone  else  charges  for  a  similar  article. 

Our  exjDorting  manufacturers  have  had  little  or 
no  fault  to  find  with  the  quantity  or  cost  of  the 
transportation  supplied  by  foreign-owned  steam- 
ship lines.  It  has  been  easy  to  make  freight  ship- 
ments to  all  parts  of  the  world  at  almost  any  time. 
The  thing  that  has  been  chiefly  lacking  was  speed, 
not  only  in  the  dispatch  of  goods  but  also  in  making 
delivery  once  the  shipment  was  entrusted  to  the 
transportation  company.  There  has  also  existed  a 
great  need  of  fast  mail  and  passenger  service  be- 
tween this  country  and  many  important  foreign 
markets. 

Much  that  has  been  said  and  written  in  advocating 
an  American  merchant  marine  has  been  arrant  non- 
sense and  has  done  the  cause  more  harm  than  good. 
The  large  annual  toll  paid  to  foreign-owned  steam- 
ship lines  for  the  transportation  of  American 
products  was  not,  as  one  writer  puts  it,  a  loss  to 
us  and  a  gift  to  other  countries.    It  represented  in 

162 


THE  AMERICAN  MERCHANT  MARINE     163 

the  main  a  fair  price  for  valuable  services  rendered 
and  we  did  not  pay  it  anyhow.  The  ultimate  con- 
sumer pays  the  freight. 

Neither  is  it  accurate  to  say  that  England  and 
Germany  had  a  big  foreign  trade  because  their  flags 
were  constantly  flying  in  every  port  and  draw  there- 
from the  deduction  that  we  could  never  expect  to 
accomplish  much  in  overseas  markets  until  our  flag 
was  made  to  do  likewise.  England  and  Germany 
had  a  big  merchant  marine  because  their  merchants 
built  up  a  great  foreign  business  and  because  their 
laws  were  favorable  to  the  development  of  home- 
owned  steamship  lines. 

The  United  States  had  a  large  and  ever  growing 
overseas  trade  when  almost  wholly  dependent  on 
alien-owned  ships  for  delivery  service.  Foreign  im- 
porters buy  goods,  not  flag-waving  exhibitions,  and 
shipping  lines  are  established  not  primarily  to 
build  up  business  but  to  serve  for  a  profit  those  who 
are  the  real  developing  influence — the  importing  and 
exporting  traders  of  all  lands. 

It  is  unfortunate  that  so  many  business  men  who 
are  endowed  with  good  thinking  powers  often  can- 
not write  and  that  so  many  who  write  well  have 
never  had  any  business  experience.  Every  export- 
ing manufacturer  in  the  United  States  knows  that 
his  goods  sell  because  they  are  what  they  are  and 
not  because  they  originate  in  this  country.  He 
knows  that  any  conceivable  number  of  American 
flags  flying  in  the  harbor  of  Buenos  Aires,  would 
have  little  or  no  direct  effect  on  the  demand  for  his 
products  there  yet  he  has  had  to  go  on  reading  and 
being  told  that  the  success  he  was  actually  making 


164     AMERICAN  METHODS  IN  FOREIGN  TRADE 

was  impossible  because  without  American  ships, 
how  could  it  be?  The  tendency  of  our  advocates  of 
ship  subsidy,  government  ownership  of  steamshij) 
lines  or  other  similar  national  projects,  to  forsake 
the  solid  ground  of  facts  and  soar  in  the  upper  air 
of  discreditable  theory  has  seldom  given  our  legis- 
lators anything  that  could  with  any  advantage  be 
passed  on  to  their  hard-headed  constituents. 

There  are  very  sound  reasons  why  the  United 
States  Government  should  in  some  way  continue  to 
favor  the  American  control  and  management  of  the 
steamship  lines  that  we  have  as  a  result  of  the  war- 
born  program  of  shipbuilding.  The  preparedness 
argument  is  not  new  but  the  predicament  from 
which  we  extricated  ourselves  at  great  cost,  served 
to  drive  it  home  with  a  force  that  should  make 
itself  felt  for  generations.  Surely  no  good  Ameri- 
can now  living  will  ever  forget  the  U-Boat  peril,  so 
totally  unforeseen  by  anyone  but  the  diabolical 
plotters  of  Potsdam. 

Nevertheless  the  terms  of  settlement  of  the  Great 
War  may  seem  to  many  to  offer  guarantees  against 
any  similar  future  occurrence  and  thus  dull  the  edge 
of  the  preparedness  argument.  At  any  rate  there  are 
good  business  reasons  for  the  maintenance  of 
American-owned  steamship  lines. 

The  fostering  of  closer  commercial  and  political 
relations  between  the  United  States  and  other  coun- 
tries demands  faster  steamships  for  freight  and 
especially  for  carrying  mail  and  passengers.  One 
of  the  great  advantages  that  European  manufac- 
turers enjoyed  for  decades  was  the  year  round 
stream  of  foreign  visitors  that  entered  their  ports 


THE  AMERICAN  MERCHANT  MARINE     165 

and  circulated  through,  their  industrial  centers  and 
recreation  or  health  resorts.  These  travelers,  re- 
turning to  their  native  countries,  spread  abroad 
there  a  knowledge  of  French,  German  and  English 
customs  and  institutions  and  promoted  a  popular 
acquaintance  with  the  statesmen,  scholars  and  busi- 
ness leaders  of  these  countries.  As  a  result,  the 
average  South  American,  East  Indian  or  Australian 
business  man  of  consequence  knows  Europe  as  he 
has  never  known  the  United  States.  This  acquaint- 
ance, which  is  so  important  a  factor  in  trade,  was 
in  large  part  the  direct  result  of  the  existence  of 
fast  passenger  steamships  which  lessened  the 
tedium  of  a  necessarily  long  sea  voyage  for  those 
who  wished  to  visit  other  lands. 

Fast  passenger  lines  have  another  decided  com- 
mercial advantage.  They  make  it  easier  for  the 
industrial  leaders  of  manufacturing  countries  to 
visit  foreign  markets  and  investigate  conditions  for 
themselves.  Many  a  prosperous  export  business  has 
originated  in  a  pleasure  trip  through  South  America 
by  the  head  of  an  American  manufacturing  firm.  A 
good  business  man  who  has  visited  Buenos  Aires, 
Valparaiso  or  Rio  Janeiro  can  never  again  be  con- 
vinced that  he  cannot  enter  into  direct  relations  with 
the  importers  of  these  cities  with  a  minimum  of  risk. 
We  want  more  of  our  manufacturers  to  visit  overseas 
markets  that  they  also  may  see  and  believe. 

Another  advantage,  by  no  means  inconsiderable, 
of  fast  passenger  lines  is  the  obvious  fact  that  they 
greatly  facilitate  selling  trips.  Under  the  conditions 
that  existed  previous  to  1914,  American  overseas 
salesmen  w^ere  obliged  to  waste  entirely  too  much 


166     AMERICAN  METHODS  IN  FOREIGN  TRADE 

time  waiting  for  steamers  to  sail  and  for  them  to 
get  somewhere  after  sailing.  Many  of  our  manu- 
facturers have  hesitated  to  send  a  high-salaried 
man  to  certain  markets  because  of  this  handicap. 

The  importance  of  a  fast  international  mail 
service  seems  very  obvious.  The  loss  of  time  and 
the  necessarily  high  degree  of  prevision  exercised 
by  both  buyer  and  seller,  owing  to  the  infrequency 
and  slowness  of  mail  steamers,  has  been  a  great 
obstacle  to  our  manufacturers  in  their  endeavor  to 
compete  in  foreign  markets  whose  contact  with 
European  sources  of  supply  was  more  intimate 
though  they  are  fully  as  remote  geographically. 
Correspondence  is  the  life  blood  of  business  and 
commercial  senemia  is  a  certain  result  if  its  circula- 
tion is  sluggish. 

Frequency  of  freight  steamship  sailings  and  a 
cutting  down  of  the  time  required  to  reach  im- 
portant foreign  ports  of  entry  are  imperative 
necessities  to  the  highest  development  of  our  world 
trade.  As  we  have  seen  in  preceding  chapters  the 
overseas  merchant  is  forced  by  circumstances  to 
estimate  the  requirements  of  his  business  and  place 
very  heavy  orders  far  in  advance  of  actual  needs 
in  order  to  be  sure  of  having  an  adequate  stock  on 
hand  at  all  times.  The  fewer  the  voyages  made 
and  the  slower  the  sailing  time  of  the  freight  ships 
which  connect  him  with  his  sources  of  supply,  the 
greater  the  handicaps  under  which  he  works. 

Faster  freight  lines  between  the  United  States 
and  foreign  markets  will,  by  increase  of  annual 
turnover,  reduce  the  overseas  buyer's  risk  and 
greatly  augment  the  usefulness  of  his  capital.    The 


THE  AMERICAN  MERCHANT  MARINE     167 

oftener  deliveries  can  be  made  and  moved  on  to  the 
ultimate  consumer,  the  greater  each  importer's  buy- 
ing power  and  consequent  value  as  a  distributor  of 
American  goods. 

The  need  therefore  of  an  American  merchant 
marine  depends  largely  on  whether  its  development 
and  maintenance  will  accomplish  certain  definite 
ends.  To  be  a  practical  success  it  must  be  the  means 
of  promoting  a  better  understanding  between  us, 
and  the  people  we  do  business  with,  by  facilitating 
intercourse  in  person  and  by  mail,  and  it  should 
effect  economies  in  time  and  money,  which  will  make 
it  worth  more  to  us  and  our  foreign  customers  than 
any  service  that  has  previously  existed. 

Whether  American  steamship  lines  can  accom- 
plish these  things  under  government  ownership  while 
the  stimulus  to  public  service  provided  by  the 
existence  of  a  national  peril  does  not  exist  is,  in  the 
opinion  of  the  writer,  open  to  some  doubt."  The 
field  appears  to  offer  great  opportunities  for  that 
initiative  which  seems,  under  normal  circumstances, 
to  be  peculiar  to  private  management  for  profit. 
Whatever  our  feeling  as  to  this,  however,  let  us 
advocate  what  we  believe  in,  intelligently  and 
sanely. 

A  great  foreign  trade  is  an  easily  demon- 
strated advantage  to  all  American  taxpayers.  We 
must  convince  them  of  this  and  keep  them  con- 
vinced to  retain  our  new  merchant  marine,  either 
under  public  or  private  ownership.  For  govern- 
ment-owned lines  must,  for  a  time  at  least,  run  at 
a  loss  and  private  capital  will  never  enter  this  field 
in  a  large  way  without  government  guarantees  of 


168     AMERICAN  METHODS  IN  FOREIGN  TRADE 

some  sort.  In  either  event,  the  people  must  pay 
and  pay  they  will  if  we  give  our  legislators  some 
sound  businesslike  basis  on  which  to  go  before  those 
from  whom  all  their  power  is  derived. 


CHAPTEE  XXX 

EECIPROCITY  TREATIES  AND  PREFEREN- 
TIAL TARIFFS 

A  EECiPKOciTY  treaty  is  an  agreement  between  two 
governments,  the  terms  of  which  provide  that  cer- 
tain specified  products  of  each  are  to  be  admitted 
into  the  other  reciprocally  at  a  rate  of  duty  lower 
than  that  which  must  be  paid  on  the  same  articles 
when  they  originate  elsewhere.  It  is  a  "  scratch 
each  others'  back"  arrangement  between  two 
nations. 

A  preferential  tariff  is  a  lowering  of  some  or  all 
import  duties  by  one  government  on  some  or  all 
of  the  products  of  another  country  either  in  con- 
sideration of  similar  reciprocal  action,  or  for  any 
other  reason.  A  reciprocity  treaty  is  the  simul- 
taneous and  mutual  adoption  of  preferential  tariffs 
by  two  countries  as  a  result  of  diplomatic  negotia- 
tion and  convention  afterward  sanctioned  by  legis- 
lative action. 

For  example,  the  United  States  some  years  ago 
attempted  to  negotiate  a  reciprocity  treaty  with 
Canada  by  the  terms  of  which  agricultural  products 
of  the  Dominion  were  to  be  allowed  to  enter  this 
country  duty  free  in  consideration  of  similar  favor 
being  extended  to  imports  of  certain  of  our  manu- 
factured products. 

169 


170     AMERICAN  METHODS  IN  FOREIGN  TRADE 

England  enjoys  preferential  tariffs  in  Australia 
and  other  colonies  in  consideration  of  the  protection 
afforded  by  the  Imperial  Government  and  their 
freedom  from  certain  financial  burdens  which  most 
self-governing  communities  usually  bear. 

The  United  States,  in  consideration  of  its  large 
consumption  of  Brazilian  coffee,  enjoys  in  that  coun- 
try a  preferential  tariff  on  pianos  and  certain  other 
manufactured  articles. 

The  theory  of  reciprocity  treaties  and  preferen- 
tial tariff  arrangements  is  that  by  lowering  the  cost 
to  the  consumer  of  the  articles  specified  in  them, 
a  wider  market  for  these  goods  is  thereby  created. 

Among  American  export  men  it  is  difficult  to  find 
ardent  advocates  of  these  trade-fostering  devices. 
During  many  years  of  constant  activity  in  export 
circles  and  of  faithful  attendance  at  all  important 
gatherings  for  the  exchange  of  ideas  on  foreign 
trade,  the  writer  cannot  recall  having  heard  one 
practical  and  intelligent  plea  for  such  supposed 
assistance  in  overseas  selling. 

The  chief  reason  for  this  is  undoubtedly,  that  the 
experienced  export  manager  has  not,  in  the  course 
of  his  selling  w^ork,  felt  any  great  need  of  such 
adventitious  aid.  As  so  repeatedly  stated  previ- 
ously, American  manufactured  goods  sell  on 
their  merits  and  not  because  they  can  be  bought  at 
a  lower  price  than  others  of  their  kind.  Therefore, 
the  existence  of  a  preferential  tariff  on  any  one 
line  of  American  goods  results  chiefly  in  a  small 
saving  to  the  ultimate  purchaser  on  an  article  that 
he  probably  would  have  bought  anyhow  and  in  a 


RECIPROCITY  TREATIES  171 

corresponding  incidental  loss  of  revenue  to  Ms 
government. 

In  these  days  of  fast  steamships,  the  chief  ob- 
stacles to  the  development  of  foreign  trade  are 
those  due  to  the  existence  of  political  boundaries 
and  of  variations  in  laws,  customs,  language,  taste 
and  other  institutions  and  characteristics  which  dis- 
tinguish each  nation  from  all  others.  The  success- 
ful exporter  is  he  who  surmounts  the  natural  and 
artificial  barriers  of  nationality — he  whose  adapta- 
bility and  skill  make  them,  for  all  his  practical 
purposes,  non-existent.  All  trade  nationalizing 
devices  such  as  reciprocity  treaties,  national  trade- 
marks and  special  legislation  like  the  Webb- 
Pomerene  Act  tend  to  widen  the  gulfs  between  peo- 
ples which  the  individual  exporter  is  constantly  en- 
deavoring to  bridge  so  far  as  his  own  distribution 
is  concerned. 

A  fair  field  and  no  favor  is  all  that  American 
goods  ask  or  need  in  world  trade.  To  our  national 
sense  of  fair  play,  there  is  something  just  a  little 
distasteful  in  the  idea  of  trying  to  persuade  a 
foreign  government  to  give  us  certain  advantages 
in  their  market  that  others  are  not  granted.  It 
isn't  playing  the  game.  Besides  it  is  likely  to  estab- 
lish dangerous  precedents  and  lead  to  diplomatic 
competition  for  similar  favors  with  much  resulting 
ill-will. 

There  is  very  little  difference  between  the  theory 
of  reciprocity  and  that  of  securing  preferential  rail- 
road rates.  If  it  is  unjust  to  allow  an  oil  producer 
to  make  an  arrangement  for  more  favorable  rail- 


172     AMERICAN  METHODS  IN  FOREIGN  TRADE 

road  rates  than  his  competitors  enjoy,  how  can  it 
be  right  for  one  nation  to  persuade  another  to  grant 
special  privileges  for  their  business  men  to  the  sup- 
posed detriment  of  all  others? 

Because  the  action  is  taken  by  nations  instead  of 
individuals  does  not  alter  the  essential  injustice  of 
such  a  proceeding.  A  decent  respect  for  the  oi)inion 
of  the  business  world  forbids  the  employment  of 
such  methods  internationally  as  well  as  intranation- 
ally.  It  was  to  make  certain  governments  conform 
to  recognized  standards  of  morality  and  humanity, 
that  we  entered  the  World  War.  Shall  we  then 
give  countenance  to  the  idea  that  it  is  right  for  the 
state  to  do  for  its  citizens  as  distinguished  from  the 
peoples  of  other  lands,  what  individuals  should  not 
be  allowed  to  do  for  themselves  and  against  other 
individuals  ? 

This  line  of  reasoning  does  not  of  course  apply 
with  equal  force  to  arrangements  between  a  mother 
country  and  its  colonies  whose  relations  partake  of 
the  nature  of  those  that  unite  the  political  units 
that  make  up  a  single  state.  In  our  theories  of 
correct  procedure  for  nations  we  are,  however, 
gradually  recognizing  more  and  more  the  inter- 
dependence of  all  peoples  of  the  world  and  as  it  is 
given  us  to  see  this  with  greater  clarity,  the  in- 
terests of  separate  communities  lose  their  aspect  of 
sanctity  in  the  eyes  of  right-thinking  men  who  seek 
the  common  good  of  alL 


CHAPTER  XXXI 

AMERICA'S  PREEMINENCE  IN 
SALESMANSHIP 

Few  of  tlie  European  makers  of  manufactured 
articles  do  their  own  selling.  In  practically  every 
instance  in  all  lines,  the  manufacturer  relies  for  his 
distribution  on  one  or  more  independent  intermedi- 
aries who  correspond  roughly  to  our  jobbers  though 
at  times  their  function  approximates  that  of  our 
manufacturer's  selling  agents. 

These  great  distributing  houses,  many  of  which 
have  branches  or  agents  all  over  the  world,  have  no 
special  interest  beyond  the  immediate  profit  to  be 
made  in  promoting  the  demand  for  any  one  prod- 
uct. Their  tendency  is  to  handle  the  lines  that 
are  in  greatest  demand  without  regard  to  the  wel- 
fare of  users  or  the  future  of  any  one  manufacturer. 

In  other  words,  the  inclination  of  the  maker  to 
go  beyond  the  middleman  and  establish  and  pro- 
mote consumer  demand  for  his  particular  brand  of 
products,  which  has  been  so  important  a  factor  in 
our  commercial  development,  has  never  exhibited 
itself  generally  in  the  Old  World.  It  is  practically 
impossible  to  find  throughout  the  length  and  breadth 
of  Europe  anything  that  corresponds  closely  to  our 
highly  organized  sales  and  advertising  depart- 
ments, with  their  specially  trained  executives  who 

173 


174     AMERICAN  METHODS  IN  FOREIGN  TRADE 

single-mindedly  give  the  best  there  is  in  them  to 
the  simultaneous  upbuilding  of  a  demand  for  each 
maker's  line  and  a  distributing  machine  to  take  care 
of  this  demand. 

Out  of  this  great  fundamental  difference  in 
distribution  policy  spring  all  the  minor  character- 
istics that  distinguish  American  foreign  selling 
methods  from  these  of  Europe. 

There  is  no  sharp  line  drawn  between  domestic 
and  foreign  business  by  the  manufacturers  or  mer- 
chants of  the  Old  World.  The  goods  are  sold  to  great 
trading  houses  that  resell  at  home  or  abroad  as  they 
see  fit.  Export  has  always  been  an  important  part 
of  the  trade  of  European  makers  who  naturally 
leave  foreign  markets  to  their  distributors  because 
they  have  no  motive  for  not  doing  so.  In  fact, 
there  probably  is  no  good  reason,  for  as  long  as 
they  do  not  do  their  own  selling  anyhow,  they  do 
well  to  leave  all  distribution  in  the  hands  of  those 
who  know  their  line  and  are  familiar  with  world 
trade  requirements. 

The  American  manufacturer  who  has  made  a 
great  success  in  overseas  trade  is  almost  invariably 
one  who,  having  well-organized  and  ably-managed 
sales  and  advertising  departments,  proceeded  to 
adapt  his  domestic  distributing  methods  to  foreign 
markets.  The  general  sales  manager,  in  co-operation 
with  the  advertising  manager,  plans  his  domestic 
selling  campaigns  not  alone  with  an  eye  on  the 
immediate  profit  but  with  the  systematic  upbuild- 
ing of  distribution  and  good  will  also  in  view.  So 
the  American  export  manager,  trained  in  the  same 
school  and  similarly  acknowledging  allegiance  to 


AMERICA'S  PREEMINENCE  173 

but  one  line  of  goods  in  wliich  he  lias  confidence 
and  on  whose  successful  marketing  depends  his 
own  advancement,  adheres  to  the  underlying  prin- 
ciples of  his  firm's  policy  in  every  country  that  he 
enters. 

This  explains  •  the  significant  fact  that  not  one 
American  manufacturer  of  highly  elaborated  goods 
who  still  cleaves  to  strictly  jobber  methods  of 
distribution,  has  ever  obtained  any  noteworthy  re- 
sults in  overseas  selling.  It  may  even  be  said  that 
our  failure  to  get  our  fair  share  of  foreign  trade 
in  many  lines  is  primarily  due  to  the  prevalence  of 
outworn  ideas  of  selling  among  the  makers  of  these 
products.  "We  cannot  job  goods  for  export  with 
any  great  degree  of  success  for  by  so  doing  we 
meet  our  competitors  on  their  own  price-competi- 
tion basis  where  they  have  all  the  advantage. 

By  adapting  the  sales  department  idea  to  over- 
seas selling,  we  have  gained  for  ourselves  all  of 
the  advantages  that  it  yields  at  home.  Our  export- 
ing manufacturers  are  close  to  the  ultimate  con- 
sumer everywhere  and  their  agents  and  distributors 
feel  themselves  to  be  highly-valued  parts  of  an 
organization  which  not  only  has  confidence  in  its 
special  products  but  is  constantly  on  the  alert  to 
help  their  business  associates  to  greater  prosperity 
and  independence. 

For  our  exporting  manufacturers,  keeping  control 
as  they  do  of  the  distribution  of  their  products,  are 
enabled  to  accomplish  much  that  European  makers 
cannot  even  attempt.  All  the  refinements  of  dealer 
helps  such  as  general  publicity,  circularizing,  store 
demonstration,    money    back    guarantees,    educa- 


176     AMERICAN  METHODS  IN  FOREIGN  TRADE 

tional  work  in  mercliandizing  and  all  tlie  other 
forms  of  co-operation  with  which  our  domestic 
selling  has  made  ns  familiar,  can  be  carried  out 
with  great  advantage  to  all  concerned. 

Why,  it  may  be  asked,  cannot  the  great  trading 
bouses  of  Europe  do  these  things  for  their  manu- 
facturers?   There  are  many  reasons. 

First,  it  is  not  in  human  nature  to  spend  money 
to  build  up  something  for  another.  These  firms 
advertise  and  do  man}^  things  to  promote  sales,  but 
they  do  them  for  themselves.  No  one  else  can  or 
will  do  for  a  manufacturer  what  he  should  do  for 
himself. 

Second,  no  great  trading  house,  handling  thou- 
sands of  lines,  can  develop  anything  resembling  an 
American  sales  department  for  each  of  them.  The 
best  it  can  do  is  to  handle  products  in  groups,  which 
is  not  much  better  for  the  individual  manufacturer. 

Third,  there  is  no  money  to  work  with.  The  man- 
ufacturer, schooled  above  all  to  meet  price  com- 
petition, sells  to  the  trading  companies  at  a  figure 
which  does  not  allow  for  individual  sales  promotion 
for  his  line  and,  as  the  trading  company  is  not  in 
a  position  to  demonstrate  the  superiority  of  any 
one  line  over  another  and  thus  get  more  for  it,  it  also 
must  meet  price  competition.  The  profit  allows  for 
general  selling  and  overhead  expenses  but  offers 
no  margin  for  special  work  on  individual  products. 

Fourth,  the  European  lacks  a  sufficient  acquaint- 
ance with  the  selling  methods  which  are  a  part  of 
the  very  air  that  American  business  men  breathe 
from  the  time  that  they  take  their  first  positions. 
Not  only  do  they  not  understand  these  methods  but 


AMERICA'S  PREEMINENCE  177 

few  of  tliem  would  use  tliem  if  tliey  could.  They 
have  gone  on  all  their  lives  doing  things  in  their 
own  way  and  surrounded  as  they  are  by  the  Old 
World  atmosphere  of  conservatism,  they  will  con- 
tinue to  do  so  until  our  inroads  into  their  trade 
force  them  into  other  paths. 

One  of  the  most  important  respects  in  which  our 
foreign  trade  diifers  from  that  of  Europe  is  in  the 
fact  that  the  organizations  of  many  of  our  manu- 
facturers reflect  an  individual  business  policy  that 
distinguishes  them  from  all  others  and  when  they 
enter  overseas  markets,  they  carry  this  with  them. 
Thus  they  work  in  a  favorable  atmosphere  which 
they  themselves  create  and  the  names  of  their 
products  become  synonymous  with  various  desirable 
attributes  in  the  minds  of  all  who  use  them.  This 
is  a  great  asset  of  direct  exporting  which  is  denied 
the  European  manufacturer  who  lacks  contact  with 
his  trade  and  his  consuming  public. 

A  great  weakness  of  the  position  of  European 
manufacturers  in  world  trade  is  the  fact  that  the 
commerce  of  their  countries  is  largely  based  on  the 
erroneous  assumption  that  a  pair  of  shoes  in  the 
eyes  of  the  user  is  a  pair  of  shoes  and  nothing  more. 
They  depend  too  much  on  the  attractions  of  low 
price  and  easy  terms  and  not  enough  on  the  demon- 
strated fact  that  everyone  who  buys  a  recognizable 
brand  of  goods  and  like  it  will,  in  nine  cases  out 
of  ten,  pay  more  money  to  continue  to  get  the  article 
which  to  him  has  a  proven  value. 

American  manufacturers  who  cannot  or  will  not 
do  their  own  selling  should  keep  out  of  foreign 
markets  or  refrain  from  assuming  any  great  risk 


178     AMERICAN  METHODS  IN  FOREIGN  TRADE 

in  entering  them  for  they  will  do  so  under  a  handicap. 
Those  who  have  built  up  a  profitable  domestic  de- 
mand for  a  trademarked  line  by  the  efforts  of  their 
own  sales  and  advertising  departments,  should  lose 
no  time  in  duplicating  abroad  the  work  they  are 
doing  at  home  along  the  lines  laid  down  in  previous 
chapters.  They  will  find  a  fertile  field  for  these 
activities  and  will  contribute  something  substantial 
and  enduring  to  that  ever-growing  monument  to 
American  executive  efficiency,  the  foreign  trade  of 
the  United  States. 


CHAPTER  XXXII 

THE  PROTECTIVE  TARIFF  AND  FOREIGN 

TRADE 

There  is,  among  American  manufacturers,  much 
adherence  to  pre-conceived  and  inherited  ideas  re- 
garding the  protective  tariff  principle.  Now  that  we 
must  become  a  nation  of  world  traders,  it  seems 
worth  while  to  review  the  whole  matter  from  an  in- 
ternational point  of  view,  set  forth  for  the  benefit  of 
all  what  the  experience  of  our  exporters  has  demon- 
strated and  draw  some  general  conclusions  as  to 
what  should  guide  us  in  our  tariff  making. 

The  hearings  held  by  legislative  committees  to 
which  this  question  has  in  the  past  been  referred  by 
the  Congress  have  seldom  or  never  covered  all  the 
ground  that  they  should.  Much  testimony  relating 
to  the  competitive  conditions  that  affect  production 
costs  has  always  been  taken.  In  these  latter  days, 
however,  the  making  of  goods  has  constituted  but  a 
part  of  the  manufacturer's  problem.  How  products 
are  sold  has  a  very  important  bearing  on  the  ques- 
tion of  protection  and  deserves  careful  considera- 
tion if  we  are  to  arrive  at  sound  decisions. 

When,  directly  after  the  Civil  War,  there  began  an 
agitation  for  a  tariff  designed  to  protect  the  new  in- 
dustries that  had  sprung  up  in  this  country,  we  were 
of  all  peoples  in  the  world  the  least  capable  mer- 

179 


180     AMERICAN  METHODS  IN  FOREIGN  TRADE 

cliandizers.  Such  manufactured  goods  as  we  then 
made  had  sold  chiefiy  because  the  public  could  get 
no  imported  substitutes  for  them.  The  war  had 
for  the  time  being  crippled  trans-Atlantic  trans- 
portation. 

With  the  resumption  of  international  commercial 
relations  it  seemed  as  if  our  inexperienced  manufac- 
turers would  quickly  be  ruined  by  the  competition  of 
the  long  established  makers  of  Europe  who,  for  rea- 
sons that  are  not  important  for  tlie  purposes  of  this 
discussion,  had  advantages  in  production  and  who, 
owing  to  the  long  acquaintance  of  their  sales  repre- 
sentatives with  the  distributing  methods  then  in  use, 
were  on  this  account  even  more  threatening  as  rivals 
in  our  home  market.  Probably  the  tariff  policy  that 
then  found  favor  was  the  only  practical  means  of 
avoiding  disaster. 

So  we  adopted  protection  as  a  temporary  ex- 
pedient with  the  idea  that,  when  it  was  no  longer 
needed,  it  could  be  discarded.  Sheltered  from  for- 
eign competition  by  a  legislative  barrier,  our  manu- 
facturers prospered  and  rapidly  increased  in  num- 
bers— so  rapidly  that  it  brought  about  a  develop- 
ment the  great  significance  of  which  has  never 
received  due  attention  from  either  the  advocates  or 
opponents  of  a  high  tariff. 

The  rapid  growth  of  our  country  and  the  con- 
stantly increasing  demand  for  manufactured  prod- 
ucts that  resulted  led  to  intense  competition  among 
American  makers  within  the  tariff  wall.  Soon  the 
older  firms,  having  improved  their  manufacturing 
processes  and  gained  prestige  in  their  field,  began  to 
talk  quality  instead  of  price.    The  jobber  was  often 


THE  PROTECTIVE  TARIFF  181 

superseded  by  the  able  sales  manager  with  his  highly 
organized  force  of  trained  helpers ;  the  drummer  of 
song  and  story  gradually  passed  on  to  make  way  for 
the  salesman;  and  the  advertising  manager  began 
to  prove  that  there  were  better  ways  to  propagate 
the  ideals  of  his  firm  than  slapping  merchants  on 
the  back,  telling  them  stories,  bribing  them  with 
dinners  and  cigars  or  dazzling  them  with  glittering 
raiment  that  was  the  talk  of  the  town  for  months. 

Today  the  United  States  leads  the  world  in  scien- 
tific salesmanship.  Many  American  manufacturers 
have  for  years  been  able  to  thrive  on  price  competi- 
tion at  home  and  abroad  because  they  have  dis- 
covered the  consumer  and  learned  how  to  make  him 
want  their  particular  products  and  because  they  have 
found  out  how  to  make  better  and  more  prosperous 
business  men  of  the  dealers  who  carry  their  lines. 
They  first  learned  to  meet  in  the  home  market  the 
rivalry  that  originated  around  the  corner  and  then 
went  out  into  the  rest  of  the  world  and  vanquished 
or  held  their  own  with  the  European  bugaboos. 

Surely  these  manufacturers  do  not  need  and 
could  not  justly  ask  for  protection.  Perhaps  others 
in  the  same  lines  whose  products  are  poorly  made, 
lack  distinction  and  are  sold  through  jobbers  or 
otherwise  to  the  few  who  do  not  care  what  they 
buy  so  long  as  it  costs  little,  may  demonstrate  their 
individual  need  of  help,  though  their  right  to  it  rests 
on  dubious  grounds.  Just  how  far  we  should  go  to 
shield  the  admittedly  weak  from  the  consequences 
or  their  own  incapacity,  is  manifestly  open  to  some 
debate  from  social  and  economic  viewpoints.  If 
most  of  our  infant  industries  in  any  given  line  have 


182     AMERICAN  METHODS  IN  FOREIGN  TRADE 

outgrown  their  swaddling  clotlies  and  pap,  how  much 
of  an  asset  are  the  remainder  who  have  proved  them- 
selves incapable  of  similar  development?  Even  the 
most  ignorant  farmer  will  tire  of  feeding  runts 
whose  chief  characteristic  seems  to  be  the  ability 
to  assimilate  nourishment  without  contributing  the 
share  to  the  pork  barrel  that  the  rest  of  the  litter 
can  and  does. 

This  of  course  applies  only  to  makers  of  highly 
elaborated  products  which  possess  individuality  in 
the  eyes  of  the  consumer.  When  we  consider  the 
producers  of  staple  or  standardized  products  the 
problem  is  altogether  different,  for,  as  elsewhere 
shown,  such  lines  cannot  achieve  peculiar  distinction 
with  the  public.  No  dealer  or  user  cares  very  much 
where  his  steel  plates,  pine  boards,  or  chemicals 
come  from  as  long  as  they  are  up  to  specifications 
and  he  gets  them  as  needed.  Such  articles  must 
always  meet  price  competition  and  delivery  require- 
ments by  the  development  of  suitable  producing  and 
distributing  facilities.  When  they  are  able  to  hold 
their  own  in  w^orld  markets  on  this  basis,  they  ob- 
viously need  no  help  at  home.  Until  it  is  thoroughly 
demonstrated  that  they  can  do  this,  they  must  be 
protected  not  only  for  their  own  sake  or  for  the  sake 
of  our  country,  but  also  for  that  of  the  whole 
civilized  world.  It  is  manifestly  bad  not  to  encour- 
age and  help  the  growth  of  all  producing  facilities 
that  really  serve  human  needs. 

All  of  the  foregoing  refers  of  course  to  a  tariff  for 
protection.  It  does  not  apply  to  purely  revenue 
measures  which  instead  of  aiming  to  discourage  im- 
ports, are  theoretically  designed  to  tax  them  below 


THE  PROTECTIVE  TARIFF  183 

the  point  where  the  law  of  duninishing  returns 
begins  to  operate. 

Now  that  the  foreign  trade  of  our  country  is  a 
bread  and  butter  matter  to  the  Man  in  the  Street, 
we  cannot  exercise  too  much  care  in  applying  the 
admittedly  useful  principle  of  tariif  protection.  In- 
ternational commerce,  which  is  simply  the  exchange 
of  the  surplus  products  of  one  country  for  those  of 
others,  is  a  reciprocal  institution  which  is  highly 
sensitive  to  interference  with  the  economic  laws  on 
which  its  operations  are  based.  Our  market  in  any 
foreign  land  cannot  but  be  affected  adversely  by 
unnecessary  barriers  erected  against  the  flow  of  its 
products  into  the  United  States.  We  must  not  un- 
duly limit  our  importation  of  the  best  and  most  dis- 
tinctive foreign-made  products,  for  by  so  doing  we 
shall  surely  restrict  the  distribution  of  our  quality 
goods.  There  must  be  no  manifest  unfairness  to 
other  peoples  for  it  invariably  leads  to  strained 
political  and  economic  relations. 

Unmerited  protection  has,  from  a  world-trade 
viewpoint,  a  very  serious  effect  on  our  factory  or- 
ganizations. Just  as  large  unearned  incomes  make 
for  extravagance  in  the  individual,  so  the  undeserved 
relief  of  any  one  group  of  our  manufacturers  from 
the  necessity  of  meeting  foreign  competition  in  our 
great  home  market  operates  against  the  develop- 
ment of  the  highest  standards  of  efficient  production. 
This  in  turn  tends  to  limit  our  possibilities  in  for- 
eign trade.  It  is  evident  that,  in  spite  of  the  su- 
periority of  our  selling  methods,  we  cannot  with  im- 
punity lag  behind  the  rest  of  the  world  in  our  ability 
to  make  good  products  at  a  fair  price,  for  to  do  this 


184     AMERICAN  METHODS  IN  FOREIGN  TRADE 

would  deprive  us  of  our  all  important  selling  argu- 
ment— quality. 

How  to  draw  the  line  between  deserved  and  un- 
deserved protection  is  admittedly  a  difficult  matter. 
As  stated  in  the  first  paragraph  of  this  chapter, 
many  of  our  manufacturers  have  not  an  open  mind 
on  the  subject,  either  because  of  ideas  inherited  from 
past  generations  when  conditions  were  very  differ- 
ent or  because  of  long  and  obstinate  adherence  to 
faulty  conclusions  drawn  from  experience,  such  as, 
for  instance,  the  attributing  of  individual  success  in 
large  part  to  a  high  tariff  policy  when  as  a  matter  of 
fact  it  is  often  due  to  unusual  executive  ability  which 
would  normally  protect  its  possessor  anywhere  at 
home  or  abroad. 

Our  manufacturers  are  not  therefore  always  to  be 
regarded  as  reliable  guides,  entirely  aside  from  any 
question  of  self  interest.  Probably  the  degree  of 
success  in  world  trade  attained  by  any  one  line  of 
industry  which  is  apparently  out  of  the  *  infant'* 
class,  offers  an  accurate  indication  of  the  extent  and 
duration  of  the  protection  to  which  those  engaged 
in  it  are  entitled.  For  the  political  spell  binder's 
theory  of  industrial  prosperity  based  on  a  high  range 
of  prices  at  home  to  enable  our  manufacturers  to 
dump  their  surplus  products  abroad,  at  a  loss  if 
necessary,  has  not  stood  the  test  of  time.  Foreign 
importers  are  not  job  lot  specialists  but  highly  effi- 
cient distributors  of  goods  which  the  people  of  their 
countries  buy  not  because  they  are  chronic  bargain 
hunters  but  mainly  for  the  reason  that  they  want  or 
need  the  goods,  and^  like  all  other  human  beings  in 


THE  PROTECTIVE  TARIFF  185 

these  circumstances,  can  be  persuaded  to  pay  a  fair 
price  for  them. 

It  may  not  be  out  of  place  here  to  point  out  that 
the  fears  that  Germany  would,  when  peace  came, 
demoralize  world  trade  by  dumping  on  foreign  mar- 
kets, at  very  low  prices,  her  supposed  accumulation 
of  manufactured  products,  were  groundless.  They 
had  no  real  foundation  not  only  because  no  con- 
siderable hoard  of  this  kind  existed  but  for  the 
far  better  reason  that,  had  German  industry  been 
able  to  do  much  more  than  meet  the  demand  for  war 
materials,  any  such  unconsumed  excess  would  have 
been  but  a  small  drop  in  the  very  large  bucket  of  a 
world  that  was  sorely  in  need  of  goods  to  keep  the 
machinery  of  distribution  going  and  to  satisfy  the 
pressing  requirements  of  all  peoples.  In  normal 
times  dumping  might  have  a  temporarily  bad  effect 
on  business  but  that  it  can  be  of  any  permanent 
benefit  to  a  nation  that  is  desperate  enough  to  re- 
sort to  such  a  practice,  our  0"\\ti  experience  in  for- 
eign trade  disproves  beyond  all  question. 

The  protection  of  newly  established  industries 
should  receive  the  most  careful  consideration.  That 
they  make  a  start  at  all  may  usually  be  regarded  as 
evidence  of  their  prospective  usefulness  to  society. 
To  leave  them  unaided  to  struggle  through  the  vicis- 
situdes of  the  early  years  unsheltered  from  the  at- 
tacks of  their  vigorous  foreign  competitors  is 
scarcely  a  service  to  our  country  or,  for  that  matter, 
to  the  world  at  large. 

It  is  unfortunate  that,  in  the  heat  of  the  political 
campaigns  of  past  generations,  our  manufacturers 


186     AMERICAN  METHODS  IN  FOREIGN   TRADE 

were  so  repeatedly  and  so  convincingly  told  that 
they  could  not  contend  with  foreign  producers  on 
even  terms.  Long  reiterated  suggestion  has  a  pow- 
erful influence  on  the  human  mind  and  many  of 
our  makers  who  should  now  be  in  an  invincible  posi- 
tion in  world  trade  persist  in  believing  that  they  can- 
not successfully  enter  the  field.  In  spite  of  the  fact 
that  they  have  for  years  known  how  to  meet  the 
domestic  rivalry  of  other  American  makers  of 
similar  but  cheaper  and  inferior  lines,  they  have  a 
fear  ''complex"  where  foreign  competition  is  con- 
cerned. There  is,  however,  nothing  quite  so  reassur- 
ing as  a  demonstrated  fact  and  this  feeling  is  gradu- 
ally disappearing  under  the  corrective  influence  of 
those  who,  in  their  endeavors  to  spread  the  light, 
keep  calling  attention  to  the  successes  of  other 
American  manufacturers  whose  products  enjoy  a 
world-mde  demand  at  profitable  prices. 


CHAPTER  XXXIII 
GERMAN  COMPETITION 

Since  the  founding  of  the  Empire,  the  foreign 
trade  of  Germany  has  been  an  anachronism.  The 
modern  conception  of  commerce,  intranational  and 
international,  is  the  mutually  advantageous  ex- 
change of  excess  products  between  individuals  or 
communities. 

When  primeval  man  wanted  something  that 
another  possessed,  he  took  it  by  force  or  did  with- 
out it.  The  development  of  the  tribe  as  a  social 
institution  brought  a  realization  of  the  desirability 
of  maintaining  property  rights  and  he  who  needed 
what  belonged  to  his  neighbor  had  to  exchange  for 
it  something  that  that  neighbor  wanted  or  some- 
thing which  by  general  agreement  or  official  decree 
had  a  recognized  value  to  all  members  of  his  tribe, 
so  that  with  it  the  seller  might  later  barter  with 
others.  Such  were  the  beginnings  of  trade  and  such 
was  the  origin  of  money. 

That  this  did  not  necessarily  mark  the  awakening 
of  the  modern  spirit  of  justice  and  humanity  is 
shown  by  the  fact  that  between  tribes  the  only  ex- 
change that  existed  was  robbery  for  which  those 
despoiled  exacted  the  highest  possible  toll  in  blood 
and  bided  their  time  to  retake  what  they  had  lost 
or  its  equivalent,    The  first  intratribal  recognition 

187 


188     AMERICAN  METHODS  IN  FOREIGN  TRADE 

of  property  rights  was  purely  an  expedient  and  out 
of  it  were  gradually  evolved  our  standards  of  jus- 
tice. It  remained  for  modern  civilization  to  apply 
the  abstract  principles  of  right  and  wrong  to  all 
humanity.  It  was  not  till  a  few  intrepid  men 
pledged  their  lives  and  their  sacred  honor  to  the 
maintenance  of  the  principle  that  all  men  are 
created  free  and  equal  and  succeeded  in  upholding 
their  contention,  that  international  commercial  ex- 
change began  to  lose  its  aspect,  if  not  of  robbery, 
at  least  of  unfair  exploitation  of  weaker  peoples  by 
those  who,  by  inheritance,  environment  or  natural 
endowment,  were  stronger. 

An  autocracy  is  a  glorified  tribe.  The  autocratic 
spirit  is  essentially  tribal.  Under  this  antiquated 
form  of  government  might  makes  right  interna- 
tionally. Expediency  still  demands  that  between 
fellow-tribesmen,  something  approximating  justice 
should  be  maintained,  for  on  the  cohesion  of  the 
tribe  depends  the  autocrat's  power.  His  subjects 
are,  however,  bred  in  the  belief  that  they  are  men 
of  superior  worth  whose  duty,  it  is  to  enhance  the 
prestige  of  their  tribe  by  carrying  the  blessings  of 
its  institutions  to  a  benighted  humanity  and  whose 
right  it  is  to  acquire,  with  the  greatest  possible 
advantage  to  themselves,  the  outlander's  posses- 
sions. 

History  is  full  of  examples  of  autocracy's  spolia- 
tion and  exploitation  of  other  peoples.  The  policy 
of  economic  oppression  that  the  autocratic  England 
of  a  century  ago  adopted  in  ruling  its  American 
colonies  started  a  school  of  political  thought  that 
brought  the  United  States  into  being,  swept  through 


GERMAN  COMPETITION  189 

the  New  World  like  an  epidemic  and,  invading 
Europe,  forced  on  the  descendants  of  George  III 
himself,  a  recognition  of  certain  inalienable  human 
rights. 

The  autocratic  rulers  of  Spain  under  the  pretense 
of  carrying  the  spirit  of  its  official  Christianity  to 
less-favored  peoples,  so  despoiled  and  oppressed  its 
American  colonies  that  today  not  one  remains  to 
her. 

France,  Holland  and  Portugal  under  the  rule  of 
absolute  monarchs  pursued  much  the  same  course 
and  with  very  similar  results.  In  every  case  the 
tribal  spirit,  exalted  by  wealth  and  power,  worked 
the  undoing  of  those  who  controlled  and  directed 
the  dangerous  forces  that  destiny  had  placed  at 
their  disposal.  Country  after  country  has  thrown 
off  autocracy's  yoke  and  joined  the  ranks  of  the 
ever-growing  forces  of  democracy. 

Throughout  the  generations  that  incubated  and 
nourished  the  spirit  of  democracy,  there  existed  in 
Central  Europe  a  group  of  racially  related  but 
politically  independent  tribes,  each  jealous  of  the 
others  and  no  one  of  them  strong  enough  to  dom- 
inate all.  Such  were  the  German  States  till  the 
genius  of  Bismarck  brought  them  under  the  rule  of 
his  tribe,  welded  them  into  an  empire  and  vested 
its  control  in  the  person  of  the  Prussian  hereditary 
ruler.  Thus  there  came  into  being  almost  over  night 
a  powerful  autocracy  in  a  world  that  had  journeyed 
so  far  on  the  road  to  complete  democratization  that 
it  could  not  believe  that  there  existed  in  its  midst  a 
strong  and  able  government  whose  rulers,  disre- 
garding the  lessons  of  history,  would  later  on  at- 


190     AMERICAN  METHODS  IN  FOREIGN   TRADE 

tempt  to  force  on  all  humanity  their  political,  social 
and  commercial  institutions. 

Imperial  Germany  came  into  being  at  a  time  when 
the  chief  opportunity  to  acquire  political  colonies 
had  passed.  She  took  what  she  could  in  Africa 
but  devoted  most  of  her  attention  to  what  may  be 
called  commercial  colonization.  Her  citizens  emi- 
grated, not  to  become  a  part  of  foreign  bodies 
politic,  but  to  remain  always  German,  holding  all 
that  they  could  acquire  not  in  a  spirit  of  co-opera- 
tion with  those  whose  existence  all  about  them 
made  these  holdings  valuable,  but  selfishly  as  men 
of  a  superior  race  whose  minds  were  permeated 
with  that  peculiar  tribal  philosophy  called  Kultur. 
The  German  trader  in  South  America,  because  it 
was  expedient  to  disguise  himself  as  an  industrious 
and  law-abiding  business  man,  was  not  on  that  ac- 
count any  less  a  bigoted  zealot  than  was  Pizzaro, 
whom  circumstances  permitted  greater  freedom  of 
action. 

The  industrial  democrat  does  not  believe  in  em- 
ploying force  to  foster  the  material  welfare  of 
himself  or  his  country.  It  is  his  conviction  that 
anything  built  up  on  such  a  basis  is  insecure.  He 
feels  that,  just  as  government  to  be  enduring  must 
rest  on  the  consent  of  the  governed,  so  the  distribu- 
tion of  his  product  must,  to  be  worth  while,  depend 
on  goodwill — on  the  satisfaction  of  the  great  mass 
of  those  who  use  it.  When  someone  comes  along 
and  tries  to  convince  them  that  another  product  is 
better,  he  fights  but  he  fights  intellectually.  He 
grapples  with  the  problems  of  lowering  production 
costs  and  of  salesmanship.    He  knows  that  if  he  is 


GERMAN  COMPETITION  191 

beaten  by-  his  own  fair  methods,  he  must  accept 
business  defeat  as  gracefully  as  he  acquiesces  in  the 
will  of  the  majority  in  his  government. 

The  illuminating  rays  of  such  a  commercial  philos- 
ophy never  penetrated  the  German  mind  during  the 
days  of  the  Empire.  Trade  was  looked  upon  as 
something  that  they  must  go  out  and  take  instead 
of  winning  it  by  methods  which  all  right-minded 
men  must  regard  as  fair.  German  business  men  re- 
lied on  trust  methods  of  production  and  distribution, 
that  is,  methods  involving  unfair  restraint,  for  there 
can  be  no  valid  objection  to  large-scale  operations 
justly  conducted.  They  imitated  the  popular  prod- 
ucts of  other  lands  and  foisted  them  on  users  for 
what  they  were  not.  They  established  foreign  banks 
and  used  them  as  clubs  on  buying  houses  and  as  com- 
mercial spies.  They  acquired  control  of  foreign  firms, 
institutions  and  facilities  and  by  this  means  forced 
advantages  for  themselves  and  their  compatriots. 
They  compelled  the  use  of  their  goods  in  many  lands 
by  the  old  device  of  liens  on  crops,  thus  fostering 
improvidence  rather  than  frugality. 

These  and  similar  methods,  all  breathing  the  tribal 
spirit  and  used  with  discretion  to  meet  varying 
conditions,  resulted  in  the  upbuilding  in  every  coun- 
try of  an  enormous  trade  and  the  accumulation  of 
great  wealth,  but  nowhere  was  the  distribution  of 
German  goods  allowed  to  depend  on  the  goodwill 
of  foreign  distributors  or  consumers.  Branch 
houses,  German  in  fact  and  usually  in  name,  Ger- 
man banks  and  German  corporations  formed  under 
the  provisions  of  the  laws  of  each  country,  every- 
where worked  for  the  home  land,  hand  in  hand  with 


192     AMERICAN  METHODS  IN  FOREIGN   TRADE 

its  diplomats  and  spies,  between  wliicli  latter  there 
seems  to  have  been  a  distinction  in  name  only. 
Never  was  there  more  than  a  pretense  of  en- 
lightened interest  in  the  communities  they  exploited 
or  of  loyalty  to  other  than  German  institutions. 
The  Kaiser  had  a  strong  commercial  colony  in  every 
foreign  country  which  he  secretly  ruled  as  truly 
as  if  it  were  a  part  of  the  fatherland  in  fact  as  well 
as  in  spirit. 

That  part  of  the  German  Empire  which  existed 
in  the  hearts  of  its  expatriated  property-owning  sub- 
jects has  never  been  portrayed  on  any  map  available 
to  the  public.  The  Allied  belligerents  traced 
many  of  its  ramifications  and  destroyed  some  of  its 
power  within  their  own  bodies  politic  but  every- 
wiiere  else  its  physical  and  psychological  holdings 
remained  intact  awaiting  the  coming  of  the  hoped- 
for  victorious  German  peace. 

The  existence  of  such  an  alien  domain  with 
great  resources  so  devoted  to  a  foreign  govern- 
ment that  the  only  guide  to  its  conduct  is  a  discreet 
but  none  the  less  zealous  interest  in  the  home  land, 
was  a  constant  threat  against  the  political  and  eco- 
nomic independence  of  each  country  so  invaded  and, 
as  a  whole,  a  menace  to  civilization.  Either  the 
world  had  to  be  made  safe  for  democracy,  political 
and  commercial,  or  become  a  part  of  the  German 
tribe. 

For  it  is  no", secret  that  had  Germany  succeeded 
in  her  attempt  at  military  domination,  the  result 
would  have  been  the  extension  and  intensification  of 
her  economic  penetration  in  countries  not  directly 
ruled  from  Berlin.    The  magnitude  of  this  disaster 


GERMAN  COMPETITION  193 

would  have  been  immeasurable  from  the  point  of 
view  of  free  men.  Only  if  England,  France,  Italy  and 
the  United  States,  separately;  or  in  combination,  had 
then  fought  the  German  idea  with  its  own  com- 
mercial weapons,  would  it  have  been  possible  to 
build  up  the  strength  they  would  surely  have  re- 
quired to  meet  another  military  onslaught.  Whether 
these  weapons  could  have  been  well  fashioned  and 
effectively  used  by  countries  with  democratic  in- 
stitutions is  doubtful,  for  commercial  colonization  is 
possible  only  under  a  highly  centralized  form  of 
government.  To  wage  a  military  fight  against 
autocracy  the  Governments  of  the  Allied  powers 
themselves  had  to  become,  for  the  time  being,  auto- 
cratic and  it  is  difficult  to  believe  that  any  thorough- 
going imitation  of  German  trade  methods  would 
have  been  possible  for  them  without  the  further  sus- 
pension if  not  the  permanent  loss  of  individual 
liberties. 

Germany,  however,  did  not  win.  The  entire  re- 
sources of  democracy  were  pledged  not  only  to  her 
military  defeat  but  to  her  political  decentralization. 
The  degree  to  which  her  government  is  in  time 
democratized  will  determine  the  extent  to  which  she 
can  follow  her  pre-war  trade  policy.  It  is  certain, 
however,  that  with  any  considerable  degree  of 
decentralization,  her  grandiose  scheme  of  a  military 
control  of  all  industry  with  its  workers  enlisted  for 
life  goes  by  the  boards.  The  beaten  German  people 
will  not,  if  they  have  an  effective  voice,  submit  to  fur- 
ther extension  of  the  military  idea.  Nor  will  the 
Allied  governments,  after  limiting  its  political  use, 
permit  it  to  invade  the  industrial  field. 


194     AMERICAN  METHODS  IN  FOREIGN  TRADE 

The  only  possible  insurance  against  the  resump- 
tion of  German  commercial  frightfulness  was  to 
break  her  war  machine  and  impose  terms  of  peace 
that  would  not  only  prevent  a  return  of  military 
frightfulness  but  would  also  absolutely  prohibit  the 
evil  trade  practices  so  menacing  to  the  liberties  of 
all  men.  Any  other  victory  would  have  been  in- 
complete. Without  her  commercial  colonization 
Germany  could  never  have  built  up  her  military 
machine.  A  return  to  this  policy  would  inevitably 
have  bred  another  world  crisis. 

Hence  the  folly  of  attempting  to  formulate  plans 
for  meeting  German  competition  on  its  owti  ground. 
We  could  not  have  done  it  successfully  for  we  are 
not  a  tribe.  Democratic  institutions  are  inimical 
to  the  tribal  spirit  and  must  prevail  over  it  or  be 
sacrificed  to  it.  We  desire  no  commercial  colonies. 
We  want  our  precious  liberties  and  we  want  others 
to  be  secure  in  the  possession  of  theirs,  both  because 
they  are  as  much  entitled  to  them  as  we  are  to  ours 
and  because  to  attack  or  curtail  them  would  be  to 
undermine  the  whole  structure  of  free  government. 

American  manufacturers  had  no  difficulty  in 
meeting  German  competition  during  the  pre-war 
period.  Their  products  were  honestly  made  and 
they  did  business  with  all  due  regard  for  the  other 
man's  welfare.  They  depended  on  good  will,  not  on 
force.  If  our  future  exporters  will  go  on  doing 
what  our  pioneers  have  so  well  done,  there  need 
be  no  fear  of  German  competition  in  the  future. 

A  temporarily  victorious  Germany  would  have 
returned  to  the  path  she  followed  before  the  war 
until  overcome  by  the  inevitable   and  irresistible 


GERMAN  COMPETITION  195 

reaction  of  human  nature  against  the  political  and 
commercial  overlordship  of  a  tribe.  The  Germany 
now  in  existence  after  the  military  defeat  is 
a  decentralized  mass  of  humanity  forced  to 
abandon  the  only  methods  with  which  they  have 
been  familiar  and  destined  in  the  main  to  grope  for 
years  in  an  unknown  world  till  the  ability  of  their 
democratic  leaders  finds  for  them  a  way  out  of  the 
trackless  waste  into  which  their  tribal  rulers  have 
led  them. 


L 'ENVOI 

In  spite  of  the  Kaiser's  dreams  of  world  con- 
quest, in  spite  of  submarines  and  Zeppelins,  in 
spite  of  German  poisonous  gases  and  German- 
poisoned  minds,  in  spite  of  the  scars  that  will  long 
show  where  the  most  savage  onslaught  of  all  time 
hammered  against  the  living  defenses  of  our  civiliza- 
tion— Humanity,  invincible  and  inviolable,  emerged 
triumphant.  Having  stamped  out  the  conflagration 
whose  heat  was  in  our  very  faces  night  and  day, 
we  resume  the  path  that  we  were  following  when  the 
alarm  was  sounded. 

Refined  by  our  trial,  but  still  the  same  in  human 
attributes,  we  must  go  on  inhabiting  a  world  un- 
changed except  by  the  improvement  due  to  our  re- 
finement. Our  energies  again  turn  to  field,  mine 
and  factory.  Each  of  us,  iDroducing  what  others 
need,  exchange  it  for  what  we  require,  and  that  is 
commerce.  No  dislocation,  however  severe,  of  the 
machinery  of  production  and  trade,  could  ever  per- 
manently check  human  progress. 

In  the  midst  of  a  great  catastrophe  only  a  few 
minds  rise  above  the  welter  of  blood  and  death  and 
continuously  recognize  the  eternal  vitality  of 
human  institutions.  Too  many  are  the  slaves  of 
what  has  been.  Too  few  recognize  the  present, 
whatever  its  aspect,  as  but  one  stage  in  our  in- 
evitable rise  to  higher  development. 

196 


UENVOI  197 

The  sick  man  cannot  remember  how  it  felt  to  be 
well,  but  the  convalescent  speedily  forgets  the  pain 
he  has  endured.  A  sick  humanity  is  on  the  road 
to  its  accustomed  health  if  each  of  us  but  does  his 
part  with  all  the  fairness,  intelligence  and  energy 
with  which  he  is  endowed. 


THE  END 


INDEX 


PAGE 


Acquaintance  as  a  Factor  in  Foreign  Trade 154,  164,  165 

Adaptation  of  Products  to  Markets 5,  6 

Adjustments  with  Foreign  Buyers 34,  51 

Advertising  Abroad,  Street  Car  and  Out-door 97,  98 

Advertising  Agents,  General  Publicity  through 97 

Advertising  Combined  with  Circularizing 68,  73 

Advertising  for  Foreign  Trade 61,  62,  63,  68 

Advertising  Heavy  Machinery 121 

Advertising  in  Local  Papers  Abroad 61 

Advertising  Media  Abroad,  Character  and  Circulation  of 99,  IQO 

Advice  sometimes  Dangerous 5,  46,  76,  126f 

"American  Atmosphere"  in  Foreign  Markets 84 

American  Banks  Abroad 151-155 

American  Export  Failures 14,  33 

American  Methods,  Importance  of  Following 10 

Americanism  in  Foreign  Trade 32,  45,  153,  154 

Boycotts  of  Imported  Goods 138,  139 

Cables,  the  Use  of 35 

Catalogs,  Export 75-79 

Catalogs,  Language  of 77,  78,  79 

Catalogs,  Translation  of yg 

Circularizing  Combined  with  Advertising 68  73 

Circularizing  Export  Commission  Houses 67 

Circularizing  for  Heavy  Machinery 121 

Circularizing  in  Foreign  Trade 61,  62,  65-69 

Circularizing  to  Secure  Agents 66  67 

Circularizing  under  Exclusive  Agency  Plan 90 

Circulars,  Preparation  of 65 

Colonization,  Commercial 190  191  192 

199 


200  INDEX 


Combinations  in  Foreign  Trade 10,  16,  61,  122 

Commercial  Colonization,  German. .  . . ; 190,  191,  192 

Competition  on  Price 5,  18,  19,  58,  181 

Complaints  from  Foreign  Buyers,  How  to  Handle 93 

Cooperating  with  Distributors 50,  51,  53,  54,  59,  60,  89-94,  175 

Cooperating    with    Distributors    under    General    Merchandizing 

Plan 90,  91,  92,  93 

Cooperating  with  Exclusive  Agents 89,  90 

Correspondence,  How  to  Handle 102,  113-118 

Correspondence,  Neglect  of 73 

Correspondence,  Translation  of 114,  115 

Credit  as  the  Merchant's  Right 103 

Credit  Extension  a  Gradual  Development 106.  107 

Credit  Information,  Securing 101,  102,  109,  115 

Credit  Losses,  Percentage  of  Foreign 105,  110 

Credit  Managers  in  Foreign  Trade 104 

Credit,  Necessity  of  Extending 102,  103 

Credit  to  Machinery  Buyers,  Form  of .  • 103,  120 

Credits  as  a  Competitive  Weapon 6 

Credits,  Demoralization  by  Extension  of  Unwarranted 7 

Credits,  Foreign 101-107 

Credits,  German  Misuse  of 4 

Credits,  How  Extended 105 

Credits,  Passing  on  Foreign 104,  109,  110 

Credits,  Safety  of  Foreign 101 

Credits,  the  Real  Function  of 6 

Criticism,  Need  for  Constructive 128-132 

Department  of  Commerce,  a  Suggestion  for 147-150 

Direct  Exporting  Distinctively  American 60,  174,  175 

Direct  Exporting,  Making  a  Start  in 60-64 

Drafts  with  Interest  Clause 106 

Drafts,  How  to  Draw  Foreign 106 

Dumping  Products  Abroad 184,  185 

EflBciency  in  Production,  Importance  of 183 

Engineering  in  Foreign  Markets 119,  120 

Exaggeration  to  be  Avoided 65 

Exclusive  Agency  Plan,  Circularizing  under 90 

Exclusive  Agency  Plan,  Salesmen  under 82,  84 

Exclusive  Agents,  Appointment  of 49,  50,  61,  62 

Exclusive  Agents,  Cooperation  with 50,  89,  90 


INDEX  201 

EAGE 

Exclusive  Agents  Defined .  ..•- 48 

Exclusive  Agents  for  Heavy  Machinery 119,  120 

Exclusive  Agents  in  Foreign  Trade 46,  48-51 

Exclusive  Agents,  Negotiations  with 50 

Exclusive  Agents,  When  not  Required 52 

Exclusive  Agents,  When  Required 49 

Exclusive  Dealers  in  Foreign  Trade 48,  52 

Executive  Ability  in  Foreign  Trade 33 

Experience,  Value  of 46,  47,  76 

Export  Commission  Houses 22-26,  63,  67,  68,  103 

Export  Commission  Houses,  How  to  Circularize 67 

Export  Department  a  Development 42 

Export  Department,  Definition  of 40 

Export  Department,  Separate  or  "Built-in" 40,  41,  42 

Export  Manager,  Cooperation  with 37,  38,  42,  43 

Export  Managers,  Qualifications  of 32-36 

Export  Managers  as  Authorities 128 

Export  Papers 61,  70-74 

Export  Papers,  How  Circulated 71,  72 

Export  Papers  of  Two  Kinds 70 

Export  Papers,  Service  Facilities  of 73,  101 

Export  SeUing  Agents 20,  24,  27-31,  122 

Export  Selling  Plan  a  Development 45 

Export  SeUing  Plan,  Formulation  of 44-47 

Export  Technicians 33 

Exporting  Manufacttirers,  Characteristics  of 37-39 

Factory  Branches  in  Foreign  Trade 48 

Failures  in  American  Exporting 14,  33 

Follow-up  Work  in  Foreign  Trade 116,  117 

Foreign  Banks,  Limitations  of 13 

Foreign  Buyers,  Adjustments  with 34,  51 

Foreign  Buyers  and  New  Lines 62,  71 

Foreign  Buyers,  Characteristics  of .  . .  35,  43,  68,  71,  104,  107,  113,  131 

Foreign  Buyers,  Dishonest 108-112 

Foreign  Buying  Agents  in  the  United  States 23,  24,  25 

Foreign  Exchange 106 

Foreign  Markets,  Acquaintance  with 32 

Foreign  Orders,  Size  of 53 

Foreign  Trade,  Broadening  Effect  of 41 

Foreign  Trade,  Making  a  Start  in 22,  27 

Form  Letters  in  Foreign  Trade 65,  117 


202  INDEX 

PAoa 

General  Merchandizing  in  Foreign  Markets 46,  52-55,  62,  63 

General    Merchandizing    Plan,    Cooperating    with     Distributors 

under 90,  91,  92,  93 

General  Merchandizing  Plan,  Salesmen  under 84,  85,  86,  87 

General  Merchandizing,  when  Advisable 52 

General  Publicity,  American  Preeminence  in 96 

General  Publicity  in  Foreign  Markets 92,  95-100 

General  Publicity  through  American  Advertising  Agents 97 

General  PubUcity  through  Local  Agents 95,  96 

German  Banks,  Pohcy  of 3,  4,  117,  151,  152,  191 

German  Cartel  System 16,  18 

German  Competition 187-195 

German  Deceptive  Practices 7 

German  Industry,  Aims  of 1 

German  Industry,  GovernmcntaUy  Directed  and  Supported. . .   1,  8,  10 

German  Trade  Policy,  Weaknesses  of 1-9,  13,  160,  190,  191 

German  Trade  Policy  Unworthy  of  Imitation 5,  12,  45 

German  Trade  Policy,  why  Admired 14 

German  Violation  of  Confidential  Relations 4 

Honesty  as  a  Factor  in  Foreign  Trade 36 

Ideals  in  Foreign  Trade 36,  45 

Imitation  of  American  Products 136,  137 

Industrial  Democracy 14,  38,  190 

International  Trading  Companies 23,  25 

Investments  in  Foreign  Markets 156-161 

Legislation,  Dangers  of 135,  139,  141,  150,  181 

Machinery  in  Foreign  Markets 103,  119-123 

Machinery  on  Credit,  Exporting 103 

"Made  in  Germany"  Idea 5,  133-146 

Manufacturers'  Agents,  Advantage  and  Disadvantage  of 87 

Manufacturers'  Agents  as  Local  Salesmen 85,  86,  87 

Manufacturers'  Agents  in  Foreign  Markets 63 

Manufacturers,  the  Duty  of 7 

Merchant  Marine,  Limitations  of 13 

Merchant  Marine,  the  American 162-168 

Metric  System,  Use  of 77 

National  Trademarks 83,  133-146 

NationaUty  as  a  Factor  in  Foreign  Trade. .   12,  38,  83,  86, 138, 139, 140 


INDEX  203 

PAGE 

Nationalization  of  Foreign  Trade,  Unsoundness  of . . . .  10-15,  60,  139 

140,  145,  171 

Packing  Complaints 74 

Packing  Goods  for  Foreign  Shipment 53 

Patience  as  a  Factor  in  Foreign  Trade 35 

Patriotism  as  a  Factor  in  Foreign  Trade 83,  138,  145,  146 

PoUcy  as  a  Factor  in  Foreign  Trade 28,  34,  69,  73, 114,  118, 150,  177 

Preferential  Tariffs 169-172 

Preparatory  Work  in  Foreign  Markets 61,  62 

Press,  Thoughtlessness  of  the  American 130,  131 

Prestige  in  Home  Market,  Limitations  of 43,  48,  61,  62 

Prices,  C.I.F  and  C.I.F.C 58 

Prices,  Determination  of 56-59 

Prices,  List  vs.  Net 56,  57 

Prices  not  Competitive 58,  59,  170 

Prices,  Quotation  of 66 

Prices,  Retail,  Maintenance  of 59 

Prices,  Revision  of 57 

Prices,  why  Higher  Abroad 57 

Propaganda,  Anti-American 129,  154 

Protective  Tariff  and  Foreign  Trade 139,  179-186 

Quality  as  a  Sales  Argument 5,  19,  40,  170,  180,  182,  183 

Raw  Products,  Exportation  of 124-127,  182 

Reciprocity  Treaties 169-172 

Sales  Department,  Domestic,  Cooperation  with 41 

Salesmanship 33,  40,  173-178,  180,  181 

Salesmen,  Americans  as 80,  81,  85 

Salesmen  in  Foreign  Trade 63,  80-88 

Salesmen,  Manufacturers'  Agents  as  Local 85,  86,  87 

Salesmen,  Nationality  of 82,  83 

Salesmen,  Training  Young  Foreigners  as 87 

Salesmen  under  Exclusive  Agency  Plan 82,  84 

Salesmen  under  General  Merchandizing  Plan 84,  85,  86,  87 

Seasonal  Demand  in  Foreign  Trade 54 

Selling  Methods,  European 60,  173-178 

Service  Facilities  of  Export  PubUcations 73,  101 

Shipping  Goods  Abroad 53 

Standardized  Products,  Exportation  of 124-127,  182 


204  '  INDEX 

PAOBl 

Staple  Products,  Exportation  of 124-127,  182 

Substitution 144 

Trademark  Defined 140,  141 

Trademark,  Irish 145 

Trademark  Piracy 135,  136 

Trademarks,  Registrations  of 98,  99 

Training  for  Foreign  Trade 32,  33 

Translating  into  Foreign  Languages 54,  78 

Translation  of  Catalogs 78 

Translation  of  Correspondence 114,  115 

Turnover  of  Foreign  Merchants •  *  —  "•  •  •  53,  166 

United  States  Foreign  Commerce,  How  Developed.  ........  11,  12,  13 

United  States  Government,  How  It  Can  Aid 11 

Visiting  Foreign  Markets ' 61,  62,  68 

Webb-Pomerene  Act 16-19,  61,  122,  126,  127 

Women  in  Foreign  Trade .* .     32 

World  War,  Causes  of  the 1>  2 


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